The market is doing what the monthly chart was saying it was likely to do. Go DOWN.

More carnage today.

Check out my post from 8 August. The market is doing what the SPY monthly chart was saying it was likely to do. Go DOWN.

Technical Confirmations of building multi-month bear market momentum
1. Two BIG Red Candles (BAD) The red candles crossing right through EMA18, so that adds huge momentum to the downtrend.  This is why this is not going to be a repeat of Sept 2010. Notice last year the EMA18 actually provided support for three months at the end of the summer. This year we just blasted through it.
2. MACD Cross (WORSE) Cyan crossing over yellow downwards, above the midline, indicating the down trend is just getting warmed up. More of the same is in store. The MACD crossover usually precedes the EMA crossover.
3. EMA Crossover to the downside to come (REALLY BAD). Confirming the MACD cross to the downside, the next technical indicator of a sustained (multi-month) downtrend (and Recession 2.0) will be the EMA8 crossing downwares over the EMA18.
4. Note RSI-7 (bottom graph) is still at 13. Don't look for the long term trend to turn around until RSI clearly ticks up, or has bottomed out under 10.

Summary
At that point, we want all our short term trades to be shorts, unless we are trading bounces in downtrends, or microcaps not affected by the overall market.  In your 401K,  starting holding your breath and keeping on dollar cost averaging into your 401K - it probably doesn't matter what you invest in, just don't stop funding it.  If you haven't sold any 401K funds yet that were in profit after the March 2009 to April 2010 bull market, it's probably too late - you might as well keep them for the long term and endure the pain.

8 Augustl