TVC:SPX   S&P 500
123 0 3
Given the cool reaction to the ECB to essentially do nothing, uncertainty about BOJ policies and remarks by Gundlach that the Fed would likely hike rates in September, Friday’s steep selloff suggests that the market isn’t entirely prepared for a September rate increase when the Federal Reserve convenes Sept. 20-21.

In the past two years there have been only 7 instances (including Friday) where the market dropped around 2.45%.

In the six other instances the market continued to fall the following trading day by about 1.35% which would take us to around the 2100 level which is also resistance. And while the market is oversold by many measures, emotions easily trump short term technical readings.

The yellow lines are key EW levels, the black line is 50% retracement nd             the ascending trend line begins at 1810. And the green box suggests where the market may find support.

While I believe the trend is up, no one knows how the market will react to a rate hike which makes going long before the Fed meeting terribly risky. Until the meeting, the market may drift lower and then chop around until there is greater certainty about the Fed's thinking.

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