Is this the Start of a Big Breakdown of the Market ?

Fridays move through the 1331 support area seems to us to be more a completion of the first stage of the market decline from last Octobers highs.  Financial and housing stocks have been the big losers during this stage.  The move down to the next major support area of the S&P, 1120, is not in play yet in our opinion although the 1294 – 1299 area of the S&P could be reached through the Fed meeting this week.  For the moment the prior support at 1331 is now resistance.

The FED may play a role this week with a slight chance of an increase in the FED FUND rate by 1/4 point.  In our opinion this would be a good move as it would provide the FED more ammunition when it needs it later. 

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