click for larger chart
Source: Kevin P. Lane, FusionIQ
As seen in the chart above the S&P 500 Index (SPX) recently broke its up trend line (green line) from the 2009 lows.
This was after several failed attempts to get above prior resistance (red lines) in the 1,370 to 1,390 area. There is some minor support for an oversold bounce near the 1,200 area (purple dotted line), however the better support and downside target from this large trend break looks to be closer to prior base breakout near 1,130 (orange line). Using the width of the trading range as a projected target (black arrows) we see the measured downside move also coincides with the 1,130 area.
Trend, breadth and momentum are all negative at this point and after a relatively uninterrupted move up since the 2009 lows it is not out of the question to think a correction is long overdue, especially given the backdrop of weakening economic data. That said the path of least resistance remains down. Until more evidence of stabilization occurs in market breadth and sentiment measures then the riskier trade remains the long side trade.