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Based on the SPX break I see us testing these levels in this order:

877.52, 872.81, 871.79, 865.3, 858.73, 852.06, 841.5

The 870 levels probably get taken out the same day. Likely to bounce around and ultimately getting to the 858 level. As you can see on the chart above that 854.05 is where the 50ema for the SPX stands right now. By the time the SPX gets to the 50ema, it will likely climb a little – hence 858.73. Anything below 858.73 while the market trend is up will likely be a really nice buying opportunity. This is something we will deal with when it gets there though.

Stockcharts posted on their blog about a potential inverse head and shoulders pattern forming. I think this will happen and a fakeout move below the 50ema to 841.5 will get us there.

I went short the indexes, RUT, NDX, and SPX at the close with the notion that the upward momentum of the market is dissipating and the down movement will spillover into next week.

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