”Yesterday’s selloff moved the Dow below a fairly major level of support at 12,000. In all likelihood, this violation will lead to more selling in the days ahead. The technical picture sets up almost too perfectly. According to what we see, the next stop is in the vicinity of the March 14th & 17th closing prices of 11,951-11,972.

From there, if our analysis holds to form, the next leg would follow along the angle of decent to converge at the end of the “T” formation; meaning a visit to the March 10 closing low of 11,740 sometime near the end of June/early July.”

Our warning proved to be prophetic so far, hopefully many paid heed to our advice. The million dollar question is, “what’s next?”

For the DOW, it appears likely that it will test the March 10th closing low. Despite steep loses Friday, the NASDAQ, S&P 500 and NYSE remain above the support levels we are monitoring. If these 3 can holdout for a few weeks when the 2nd quarter earnings season begins in earnest, we have a chance to build a case for higher stock prices with solid earnings.

A disappointing earnings season, coupled with all four major indexes printing new lows simultaneously, would spell