I think we are approaching oversold levels and that we will see a bounce this next week.

We’ve shed over 8% and only seen 1 positive day in the last 10 sessions (S&P 500). While there might be news that supports the fall (i.e. consumer confidence collapse), the market won’t tip too far without seeing some stability in the short term.

Rather than trying to bag a quick profit on the bounce, it might be a good idea to use the bounce as a good spot to take a short position on the market at the first sign of weakness.

The yellow lines show the trading channel the market has been in for the last couple of months.

Also, by going under the last support level of 1050 on June 29th, I have downgraded the market status to Bearish (as seen in the top right of the site).

There is a small amount of support where we are currently based on a correction bottom on October 2, 2009. This will most likely only be enough to provide a pause on the way down.