Capitulation Coming?

Stocks started the session as if they would reverse today but again selling came in later in the day, and the close was below the March 6th low which was the next chart support level from the winter rally.

The daily bollinger bands are continuing to expand and price closed below the lower band again today on SPY.  As long as that configuration remains, the possibility increases for large price declines to occur in a relatively short period of time.  It is one of those times where it is very likely that a price rebound will occur SOON, but even 3-5 days in the future may be 5-10% lower in price (or more)before the rebound starts.

Gold, silver, oil, and the Euro are also showing volatile bollinger band formations.  They are somewhat extended, so the move may be near its end, but we have certainly not seen a typical washout type day in stocks, and the price percentage moves have been pretty controlled in all those markets.  I think there will likely be a larger absolute price move to the downside in these markets before the move completes with any multi-day price rally to follow.

The next major chart support on SPY is 128ish which was the Oct 2011 high.  Gold and silver are just above their winter lows.  A break of those lows in those markets could sound the death knell of the secular bull market in those commodities.  Understand the possibility of a major downside continuation if those lows are exceeded.  The monthly stochastics on gold prices is opened up nicely to the downside and falling from above 50.  It has been a couple months since I went over some of these details, but the AVERAGE downside retracement of bull markets similar to our recent gold bull would put gold price BELOW 900.  So with prices at 1544 now, understand by historical standards, we should really EXPECT further significant downside.