The S&P500 index has generated a technical sell signal

The S&P500 index has generated a technical sell signal. The technical outlook has turned negative. The expectation is for significant downside from current levels. The S&P500 index sell signal follows the technical sell signal generated on the Dow Jones in the previous trading session. It is an extremely negative technical indicator for the US market outlook that two key indices have generated sells signals in rapid succession. Also as detailed in previous wires, the key US indices have been located in extremely overbought territory on a momentum basis, with parallels between where the US market was recently positioned, compared to late 2007. This had been reason for extreme caution relating to the sustainability of the US market rally and adds weight to the view that the US market has downside potential.