Hello Everyone,

Here's a link to Tonight's Newsletter.

Upside: 3950,3971, 3985, 3997, 4020, 4044, 4068, 4084, 4105
Downside: 3913, 3894, 9875, 3847, 3830, 3815, 3800, 3782

Yesterday the market sold off from a very obvious bear flag pattern, and today that selling continued with a strong trend day to the downside. The retail sales came in much weaker than expected, however futures began a strong sell off many hours prior to the retail sales data (selling started selling off at 1 am). Our proxy the S&P 500 lost about 100 points -2.5%, while the Nasdaq QQQ lost -3.4%. By the way AAPL, which has a huge weighting in the indexes broke down from a bearish coil pattern, and if this loses major shelf support, that will not be pretty for the market.

The SPX broke several key levels today, the first being the uptrend channel line, and the 2nd being the less-sloping trendline around the 3925 area. Intra day the SPX dipped below the 3900 level to 3879 that many technicians are watching, and closed at 3896, 4 points below the 3900 level.

The SPX from the highs of 4101 to the intra day lows of 3879.5 pulled back 222 points, which slightly exceeds the previous largest pullback of 214 points. This is potentially very negative, however should we get further downside tomorrow, we'll then for sure have a confident break in symmetry, which would set the stage for the next rally to form a lower high. Note that there is an unfilled gap on the SPX from late November that could be a target as gaps like to be filled on the cash indexes.

Tomorrow we have Quad Witching for the options

Administration Note: Steve will be traveling from (12/15-12/23).

Matt