The decline in the emini S&P 500 off this morning's high at 1173.75 violated very important near-term support at 1151-1150. This has triggered an initial downside follow-through to 1144.75, likely on the way to test more important support at 1135-1130 next.

If that support zone is violated and sustained, then we should expect downside continuation that revisits the 1090-1070 area, which will represent a retest of last Tuesday's lows.

On the other hand, if it turns out that today's weakness in the index so far is part of a topping process and the e-SPZ manages to claw its way back above 1150-1153, then we should expect additional strength into the 1162-11165 area prior to a more pronounced "rollover."

 

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