Well, no bounce and it did appear that it might happen right up to the moment the selling started. Futures really tanked after the regular cash session closed . As I wrote in November, when there’s been an increase in capital gains taxes, the markets have been down about 1.5% in December. $SPX now down 0.97% for the month (-1.94% for the week). Of course, if there’s any good news out of D.C. on Sunday, then markets could take it all back on Monday.
We’ve blown through and closed below an important support level and are sitting right on another one. Last two days, $SPX has stopped dead at 1401 but today it closed awfully close to the low so it’s going to be tough for $SPX to hold above there unless there’s some good news out of D.C. If we should drop below 1398 then we’re probably going to take back every point of this latest rally leg. I’ve expanded the Bull Flag but if we should drop below 1398 then you might as well consider that the Bull Flag has morphed into a new falling price channel. To confirm that it is new falling price channel, we’d need to see a test of the upper line along with a failure to break through.
GL and be careful in the week ahead.