Good Morning, Traders. Bearish day for the markets on Tuesday as across the board weakness pushed the S&P 500 below trendline support for the first time in almost 2 months. We have recently been discussing the importance of the 1287 area (circled area 1 above) in the S&P and what it would mean for the S&P going forward if that area was violated. As you can clearly see in the snapshot below, the 1287 in the benchmark index is currently the trendline support (diagonal blue line) and also 50 period daily moving average as well. Although we did not close below the trendline yesterday, the fact that we breached this level intraday is definitely of note. Also, as we always point out in this commentary, its the way that a market does something that is just as important as what the market does. In this case, the selling was broad based. All sectors on the ShadowTrader Core Sector List took it on the chin and closed red. Breadth was very negative, closing very close to 4 to 1 negative on both exchanges. Advance decline lines closed at minus 1556 and minus 1437 on the NYSE and Nasdaq respectively. Remember that this is on the heels of Friday's minus 2034 advance decline line close on the NYSE. And the kicker? Overall volume had a sharp increase marking this day with a fat "D" for distribution as total turnover increased by an average of 16% on both exchanges. Recent scorecard: Bears 2, Bulls 0. So, that being noted, we turn our attention back to the chart below and focus on the lower two circled areas as our next lines of support in the S&P. The first lower area (2) is prior swing lows from the month of March which currently reside at 1268, and the lower area is even with swing lows of February at the 1253 area. Any confirmed close in the S&P below Tuesday's lows greatly increases the odds that we move to at least area 2 in the near term.

Peter Reznicek is the Chief Equity Strategist and a principal of the Prana Fund, a domestic hedge fund, and ShadowTrader, a subsidiary of thinkorswim which provides coaching and education to its clients on both intraday and swing trading of equities. For a free trial to the full version of The Big Picture or to learn about ShadowTrader's other services, visit shadowtrader.net or send an email to preznicek@shadowtrader.net.