Taking A Step Back

This morning it looks like the S&P500 is going to, at least, retest the August lows. But what if they don't hold? Then you're probably looking at last summers lows at some point in the near future, which takes us somewhere between 1020-1040 $SPX:

The 50% retracement from the March 2009 lows to this year's highs is around 1020. If last month's lows don't hold, then these levels are probably in the cards. We'll go over the weekly charts once this bloody week is over so today's close will be important for the major indexes.

This 6-week consolidation has been called many things: A bear flag, a base, a range. A convincing break below this area creates a big problem. This 6-week long support will then become supply, or resistance, on any attempt to get back above. On the flip side, if this support does indeed hold on, then it would take a break above 1230 for this to be bullish. We're not even close to that level....

I'm sure everyone has their shopping list ready, and that's great, but make sure that there are risk management strategies involved with some of that bottom fishing. Go read What Should Investors Do Now where Barry Ritholtz explains how investing is a proactive — not a reactive — endeavor.