Overnight’s clear break below 08-Sep’s 2521 corrective low confirms a bearish divergence in daily momentum and our broader peak/reversal count introduced in 22-Sep’s Technical Blog.  This continued weakness leaves yesterday’s 2615 high in its wake as the latest smaller-degree corrective and new short-term risk parameter the market is now minimally required to recoup to jeopardize the impulsive integrity of a new bearish count and perhaps re-expose Jul-Sep’s impressive rally.  Until at least such 2615+ strength is shown, further and possibly protracted losses straight away are expected.

Former 2521-to-2542-area support, since broken, is expected to serve as new near-term resistance.

Of course, 21-Sep’s 2707 high is the important by-product of today’s bearish divergence in daily momentum (above) that also confirms a “double-top” reversal pattern along with 03-Sep’s 2708 high.  Along with the return to historically frothy levels in our RJO Bullish Sentiment Index that warned of and accompanied the past couple years’ peak/reversal environments AND the market’s recent proximity to the upper-quarter of its massive multi-year lateral range, we believe the confluence of technical facts warning of a broader reversal lower is unique and compelling and presents a favorable risk/reward opportunity from the bear side from the 2550-area OB.  A return to at least the 2400-to-2200-area that defines the middle of the middle-half bowels of the three hear range is easily envisioned and potentially back to this range’s lower-quarter around 2000.

These issues considered, traders are advised to first approach any recovery attempts t the 2540-area OB as corrective selling opportunities with a recovery above 2615 required to negate this specific call and warrant its cover.  In lieu of at least such 2615+ strength, further and possibly sharp, sustained losses straight away should not surprise.