Below right (grey type) is what we discussed about the SPX at Thursday's close.
Let's notice that the price structure has plunged from the confines of its Dec-Aug top formation, and as we speak, is testing its Oct 2011 support line in the vicinity of 1992.00.
Although my near-term work might argue for the emergence of a two-way trade, my intermediate-term work suggests strongly that the SPX has unfinished business on the downside-- to 1900 at a minimum in the hours and days ahead.
Such a scenario would amount to a 10%-11% correction off of the May-July highs.
That said, however, if a garden-variety, 10% correction does not include a major capitulation, then we should be aware that a test of the Oct 2014 low will represent a 15% correction, while a test of the Feb 2013 low will amount to a 19% correction off of the highs. MJP 8/21/15
My observation here is that the SPX is on the verge of breaking down from an 8-month topping formation, which is a very different set-up than the prior significant, corrective breakdowns that sliced and sustained beneath both the 150- and 200-day EMAs.
If today's weakness is not reversed quickly, the topping pattern could bring to bear enormous selling pressure on the price structure.
Couple the enclosed set-up with my negative-cycle work after a 6-plus-year’s bull run, and the SPX just might be heading into a corrective sequence that the bulls have not experienced in a very long time. MJP 8/20/15