Before panicking at the sell-off Friday, take a moment to look at the simple price structure on the S&P 500 short-term charts. For now – and until proven otherwise with a break – we’re still above critical support, so it may be early for panic.

Let’s take a look at the Daily and hourly chart of the S&P 500 index:

Click on image to enlarge!

I’ve been highlighting the importance of rising trendlines lately, and we’re still above the dominant short-term trendline… and 20 day EMA.

Price sold off 1.6% Friday after forming a spinning top reversal-style candle at the upper Bollinger Band on a negative internals divergence… all bearish.

It’s one thing to have a ‘retracement sell’ signal and a ‘full trend reversal’ signal. We are a few more steps away from any sort of reversal, based on the data we have right now.

However, it was very logical to expect some sort of pullback to support. How deep the pullback goes is the question.

For now, we need to watch the 1,180 level as key, which is the rising 20 day EMA.

For reference, we also have the rising 50 day EMA at 1,160 and the ‘line in the sand’ or prior price high at 1,150.

Above that, and where price bounced on Friday, we see the rising trend channel which currently rests near the 1,190 level.

We all want to call exact tops and bottoms, but it’s often better to wait for proof, or at least confirmation in the form of price breaking trendlines and daily moving averages.

With that in mind, let’s drop down now to the pure trendline (with moving averages) on the hourly frame.

Click on image to enlarge!

For more daily updates from Corey, visit his blog at Afraid to Trade.com