07.14.2011 -- Market still has a chance...

Lets start right out with the SPX daily;

We closed today back under some critical support. The 50/100 and the bottom of the bollingers. Again we are back in a situation where it's critical that the market bounces tomorrow and regains that support.

Google is rocking north tonight and helping the futures rebound from bad US soverign debt news, but in the end, that's only Google and it can only do so much and the broad effect will last hours not days.

Some other things for the bulls to hang onto, the Russel 2000, Dow Industrials and Transports are all still holding and above all moving averages. So the S&P is the laggard here and the first to break. That's probably because of the horrific action in the finanicals.

Here's the hourly;

We closed back in that channel. That leaves little support for the S&P down here. Again, it's critical that the S&P gets back out of that channel and back over the 50/100 tomorrow.

In my opinion, Google isn't enough. But, it will be enough tomorrow to keep the DOW, Russel and Nasdaq still above critical support. I just don't think it will be enough to save the S&P.

So the question here is what kind of earnings are we going have from tech and small caps in general going forward here. If a few high profile bad reports happen, that may be all it takes. The market will really need some stellar reports from the tech and small cap world to save the S&P here and hold critical support.

With the economic numbers that have been sliding, I don't know if we'll get it. Maybe they'll be good enough to stall a major sell off until the fall when worse numbers are unavoidable.

I think the probability is that we are in for a big sell off. We'll get a clue tomorrow. If the Google news broad effect really doesn't last long and doesn't seem to have much effect, then it would be obvious that the rest of market participants agree with me. Otherwise, they'd see this as a big buying opp in front of some good earnings near the bottom of a correction.

GL

CJ