June 23rd 2013: A change in tone...

I skipped a few weeks there while $SPX was forming a box (ranges/consolidation/wedge/whatever_you_want_to_call_it).  It appears (to me) that we broke the box to the downside this week and thus it deserves some attention.  Perhaps more importantly, the tone of the market is changing.

On the positive side of the $SPX technical ledger:
- Monthly trend is still up
(that's about it)

On the negative side of the $SPX technical ledger:
- First red weekly impulse bar since December 2012
- Price closed below the weekly chandelier stop line for the first time since November 2012
- 5w EMA is below the 10w SMA for the first time since October 2012
- Weekly FORCE(2) is red (below zero)
- Weekly RSI(2) is below 10.
- Bullish price patterns are failing (ex. inverse head & shoulders)

So, that's what I see right now.  Where are we going?

There's basically 3 scenario's for every trade:
- Lower
- Flat
- Higher

Based on this week's technicals, my bias is that we trade lower after a brief oversold bounce.  If this is correct, I'll have a good chance of entering a short trade next week with an expected tag of 1608 (the bottom of the box that we just broke).  If the short works, the market should fall to 1549 at some point in July (a box length).

Flat seems like a low probability since volatility is increasing and we've broken the recent box (range).

Higher is possible given the market's tendency for false breaks and the persistent FED funny money liquidity injections as well as end of quarter mark-up.  If the market closes above 1608, then I'll have to give this possibility higher odds.  A close above 1608 would put the other side of the box back into play (1667.47).

Either way, there's about 60 pts of range to play in.  Good luck!

Here's the chart...