As I pointed out a couple of weeks ago “the Market (the S&P) looks like it is losing steam…” and boy did it lose steam. More than I anticipated. Now we find ourselves wondering if the Market is going to ever find a bottom. The chart below suggests that either we just found a bottom (support) or if yesterday’s low doesn’t hold we could see this market head way down. In fact, so far down that at this time I don’t even want to post those numbers. Now let’s look at the facts from the chart:

1. The Market has taken out all of my Trading Points to the downside (as it always has) leaving behind only my Trading Points to the upside (along with a new one at 1074.50). A good thing.
2. The “floor” or support now appears to be 1006.00 which we will watch for signs of confirmation.
3. RSI (Relative Strength Indicator) actually is divergent to the price action suggesting that this could be a good area of support. Again we will have to wait for confirmation.
4. The Market hit my “magic” number on the RSI a couple of weeks ago and the Professionals shorted the market like I predicted.
5. Volume is suggesting a capitulation has occurred. Therefore watch for trend change.
6. Just as predicted, “most likely the catalysts to drive the Market down will be either the Economic numbers (especially Consumer Confidence – which I say is one of the best gauges to watch) or the debt crisis in Europe (great excuses for Traders to move the Market to where they need it to go).” Which the Traders did.
7. What do not want to see tomorrow is a Market that comes out too strong from the Open nor do we want to see the Market trade below June 30th’s low.

Here are my updated Trading Levels:

1127.75
1098.75
1081.00 (Important Level)
1066.50 (Important Level)
1052.25 (Important Level)
1034.25
1006.00 (Support)

And here are my updated Trading Points (all of my lower Trading Points were HIT this past week):

1198.50
1156.25
1109.75
1086.00 HIT
1063.00 HIT
1050.75 HIT

Newest Trading Point:

1074.50 NEW

Click on image to enlarge!

Have a Profitable Day Trading!

For more from the Market Trading Guru, you can follow his blog at http://mrkttradingguru.wordpress.com to receive the daily Trading Levels or on Twitter: @MrktTradingGuru.