SPX bounce?

Today was certainly bearish, and points to lower levels in the coming days/weeks.

Normally we would expect a decline to 992 SPX, and then bounce to 1006, 1012, or 1017, but because the drop today was severe and fast, it's hard to tell if more downside will occur before any bounce. Last in SPX is 998. The SPX will not necessarily go straight down to 992, it can consolidate and then go to 992. Or, it can bounce up to the 1006/12/17 right from 998, but the 992 move down first would be considered "normal".

Unless the bulls exhibit unusual strength and can propel and sustain SPX over 1016, then further lows are expected below 992 after any bounce up.

How I came up with 992:

1039-1015 = 24 points

1015 - 24 = 991 expected decline, and then the bounce up to the fibs 1006 or 12 or 17

Very interesting: In the chart below, the support channel line is exactly parallel to the resistance line; I did not "make it fit". That is, I drew the R trendline from the highs, and then just drew an exact parallel line, which just "happened" to fit the lows almost exactly. This gives more credibility to the trendlines.

The chart below shows one possible path to 992 before the bounce, but we really need to just wait and see what transpires in the overnight ES, which can change things.

* ChristopherStockGuy is not an investment advisory service, nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities or currencies customers should buy or sell for themselves. For details, see the post from SATURDAY, AUGUST 15, 2009 titled "Disclaimer".