Watch Dow for leads

Friday was a whopping hit on the averages, but the Dow really took it on the chin. The Dow Bullish Percents dropped to 40%, leaving them at the 38% retracement line for the Mar-May advance. Another few points lost and a complete retrace to March lows is likely.

Although the Dow is hardly representative of the market as a whole it does give an inkling as to what might happen for its cousin the S&P. The Dow is precariously close to another run on January-March lows; with my earlier measured move target of 12,055 likely a day or two away.

Consequently, it could mean greater pain for the S&P:

Dr. Declan Fallon, Senior Market Technician, the free stock alerts, market alerts and stock charts website

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