you are right that -74 on the Dow can be made up easily if the sentiment is there --- but from 9/12 on we have now made a lower high and there seemed to be a sentiment shift as oil held the mid 60's and above {inflation worries growing}. the main reason for buying lately was supposedly a "fed may be done soon" opportunity and that just did not hold water in my opinion --- now the fed yesterday has confirmed that they are not done AND they have their eye on inflation even more apparently then before. thus today we have follow through and we have not even seen what the effects will be of this new storm.
A classic A-B-C "measured-move" off the 1243.13 SPX high will allow for this decline of the past 3 days to target 1.382 times the first A decline, thus getting: 1212.69 1208.38 would be 1.618 times the first decline. Just some simple fibonacci "measured-moves".
the main reason i am looking at 1208 is that was the "Z" contract low of 08/30/05 {yes 08/29/05 had a lower low but that was a event related low}. now 1200 is just a psychological level so that would be tested if 1208 was broken in my opinion --- so yes there is plenty of additional downside possibilities.
I think the low of today will be made somewhere near 3:35pm ET. That's about when I'm planning on exiting my short position if the market keeps going south...lol.
1208.38 is again the key level on the SPX chart today. Should this level hold, expect the 1213.20 area to be challenged, with resistance at the 1215.30/1217.40 level. Despite the concerns over Hurricane Rita, the market has a 60% chance of forming a low today.
Back in black I hit the sack I've been too long I'm glad to be back [I bet you know I'm...] Yes, I'm let loose From the noose That's kept me hanging about I've been looking at the sky 'Cause it's gettin' me high Forget the hearse 'cause I never die I got nine lives Cat's Eyes Abusin' every one of them and running wild