Already today, the e-SPM has pressed beneath my "orthodox low" at 1090.75 from May 7 to a new reaction low at 1074.50, off of the April high 1216.75. We can see from the enclosed daily chart that 1074.50 does not represent any particular technical significance (support) other than the fact that if the index did not continue to the downside from there then perhaps a condition of near-term bearish exhaustion has set in.

That said, the e-SPM must climb above 1094 to trigger signals that "something ended" at this AM's low of 1074.50 -- or 107.95 if tracking the S&P 500 Depository Receipts (SPY). Inability of the e-SPM to hurdle 1094 followed by a resumption of weakness that breaks 1074.50 will point the index towards a full- fledged test of the May 6 "Flash Crash" low at 1056, and one step closer to "activating" the crash scenario (1056-1036 last cushion zone).

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.