-Bo Yoder

    The SPY remains sandwiched between moving averages. I believe Wednesday's tapping tail has the potential to really spook the bulls, and have taken short exposure post-Fed to try and capitalize on that opinion.

    The weekly chart of the SPY shows a market that is testing the area of support offered by its 20 EMA. I happen to believe this support will be broken because of the price pattern that I see on the monthly chart...

    The monthly chart of the SPY shows a classic wiggle type sell signal. If we close the week out with the candle looking as it does now, I would expect to see some significant follow-through to the downside. I would expect at least a 60% retracement if a higher low is to form, or more likely, a double bottom or breakdown if the economy continues to languish.

    The DIA monthly chart has the same sell pattern as the SPY. This price action is often seen intra day on stocks with extreme momentum. If this pattern predicts correctly, it will break us down to new lows for the year. I hope fervently that a double bottom is in the cards, but at this point the price pattern outlook is pretty bleak.

    If the bearish price action in the markets produces a sell off, I would expect to see stocks with monthly bear flag patterns like MON really get hurt. I suspect the next few years will be horrible for investors, but fantastic for traders as the markets and the economy hack and gasp their way into recovery.

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