Wednesday saw the beginning of what will be a much needed corrective wave for the recent rally. The resistance point is actually sitting a few points below 1830, but I am still treating that area as the next key level. This correction is likely to test 1800. The rally has been very sever and a steep 25-30 point correction only seems natural, in my opinion. That being said, assuming it amounts to a flag on the daily chart, the upside breakout that may occur could be similar in its power.
I imagine it'll take at least the rest of the week to see how low this goes.
We are sort of approaching a moment of truth as 1850 is still looking very much like a top, and there is a tentative falling channel on the daily chart. Below the 1800 mark, at around 1775 is the 100 day MA, which would serve as an immediate downside target if 1800 is broken. Personally, I'm expecting a bounce off 1800 and a new high to be put in, but I won't discount the downside.
S&P 500 Daily Chart
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