SPX: When Support and Channels Get Breached

Yesterday the day ended forming a high-wave doji which showed extreme uncertainty in the market in terms of what direction it wanted to head. As seen on the chart below the SPX has been in a downtrend, and was precariously sitting at the bottom of the channel (or the cliff). Once the momentum got started over the cliff, the selling continued and completely breached the channel support.

The day ended 39 points lower at a support horizontal support area from May 2006, yes May 2006! I'm getting the feeling that the rapid retraces of pull backs we saw in 2007 may be a thing of the past. Now we have to watch these conditions carefully to learn how these new market conditions tend to act.

A relief rally seems likely soon, but until we see evidence we have to honor the trend which continues to be down.

SPX Daily Chart: