Earlier in the week I showed a number of moving averages that appeared to be on the verge of giving major sell signals. Here's another long-term support line to watch. The S&P 500 is bearing down on a two-year support line that starts in the summer of 2004. A break of that important support line would signal a drop to last October's low at 1168. That would be the first double digit percentage loss since the bull market started more than three years ago. I think the odds are pretty good that it's going to happen. The weekly MACD lines have been bearish for the last two months. This week's downturn has widened the spread between the two MACD lines which means that downside momentum is intensifying. The monthly chart is also in a very dangerous position.


- John Murphy

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Chip Anderson
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