Friday's action could have been one of the more destructive technical sessions in recent memory. Not only did the day's weakness totally reverse Thursday's upside reversal gains, it closed on the low for the day and for the week. Furthermore, let's notice that on the enclosed weekly chart that this week's close broke and sustained beneath 1) the Aug-Oct support line; 2) the 10-week (or 50-day) MA; and 3) the major up trendline that originated off of the March 2009 low at 666.79. Finally, let's notice the very negative juxtaposition of the weekly slow stochastics and the weekly RSI.

The composite picture that we are left with this evening is ominous for the SPX, and should result in a relatively nasty correction that is similar, but more intense than the 88-point decline during the June-July period. Even so, if such a decline emerges and equals the 10% June-July decline, the SPX will press to 990 next. However, if the magnitude of the correction is commensurate with the much more dramatic tops in the oscillators, I will be expecting a decline to 960-930 before the dust settles.

Mike Paulenoff is author of MPTrader.com (www.mptrader.com), a real-time diary of his technical analysis and trading alerts on ETFs covering metals, energy, equity indices, currencies, Treasuries, and specific industries and international regions.

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