Stocks entered a confirmed breakdown yesterday.
Corrections do not happen all at once. Normally when stocks break a major trendline, they usually bounce soon thereafter. If the bounce brings stocks back up above the former trendline, (reclaiming it) then the trend remains intact.
If, however, stocks are rejected by the former trendline, then the breakdown is confirmed and you’re heading down.
Take a look at the market today.
As you can see, the S&P 500 was rejected by former support. The uptrend has been broken. The first downside target is 2,050 or so. If that doesn’t hold then the door is open to a more serious breakdown (more on this in a moment).
This breakdown is not a minor development. That lower trendline actually runs all the way back to late 2013. We’ve only broken it once before in early October 2014. And it took considerable Fed intervention to create a bounce at that time.
Unfortunately for stocks, this time around the Fed isn’t engaging in QE anymore... so that market prop won’t be in place.
If stocks don't hold at 2,050 then the ultimate downside target established by the series of lower lows in 2014 is a very REAL possibility.
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Phoenix Capital Research