TECHNICALS -SPX

Markets are set top open lower after yesterdays crushing and a signal indicating lower prices may be in place.

The SPX made its high on October 11, 2007 at 1,576 and a low on January 23, 2008 at 1,270 or a 306 point swing in 3.5 months. For now support on the chart at 1,340 and resistance near 1,390.

Most want to see those lows get retested and hold - as there should be a lot of buyers anywhere near those low levels assuming a big bad event doesn't occur at the same time.

If one looks closely at the chart (click on it), one can see that volatility has become a bit compressed as the Bollinger Bands have moved inside the Keltner lines. When the bands revert outside the Keltner lines momentum accelerates in the direction of price.