Per David Elliott :

Yesterday we said, Friday’s market reversed most of the gains from Thursday. This candlestick pattern with two large red candles with a green day in the middle usually resolves to the down side at market tops. I call it the ice cream sandwich candle pattern for down moves.

Yes, ice cream sandwiches were my favorite when I was growing up and still are!
Monday delivered on the down move that started with our call of last week of a Key Reversal for the Indexes, and the double top on the Transportation Index. As much as the markets tried to shake off the technicals, it failed, and gave way to the Technicals, and market patterns.

We are at the DJ-30, and SP-500 20 SMA.
This level usually gets a bounce, even if we are going lower.
QQQQ fs have another 50 points to reach its 20 SMA.
The DJ-20, transportation index, has broken the 50 SMA. I would not be surprised that it tries a retest from below tomorrow or Wednesday.
This historic bull move is not going to die overnight.

We now have two lower targets for the continuation of this down move.
1st, the Daily 50 SMA, for the DJ-30 that is the 9672.
2nd the lows of last September of 9418.
I do not expect a market fast drop to those numbers.. Yet, in light of more quarterly earnings numbers still coming in.

Tomorrow I am expecting some bounce to the upside. Resistance levels start at 9938, then 9991, and 10018.

Important for Tuesday is earnings for Visa V before the market open.
Also VLO reports before the open after having a good pop the last two market days.
Others reporting are X, PCAR, BIDU

Other issues of noteworthy is the CAPMARK bankruptcy:
The carnage in the commercial real estate sector continued over the weekend as private equity-backed Capmark Financial Group Inc., a former unit of GMAC LLC, filed for a
$21 billion bankruptcy. The distressed company had been racing to complete asset sales, a debt restructuring or a prepacked bankruptcy with creditors, which include Citigroup Inc. (NYSE:C), J.P. Morgan Chase & Co. (NYSE:JPM) and others, but ran out of time.
The Chapter 11 filing wipes out the investments of equity sponsors Kohlberg Kravis Roberts & Co., Goldman Sachs Group Inc.’s (NYSE:GS) private equity affiliate Goldman Sachs Capital Partners, Five Mile Capital Partners LLC and Dune Capital Management LP, who together paid $1.5 billion in cash and over $7 billion in debt for GMAC’s commercial real estate business in 2006 and renamed it Capmark Financial.

Fearing a total implosion of commercial real estate could drag the economy back down with it, the Federal Reserve Board has been keeping an eye on the sector and recently extended its TALF program through June 30, 2010. The securities eligible for collateralizing TALF loans include newly issued, triple-A-rated asset-backed securities backed by loans to consumers and businesses, and newly issued and legacy triple-A-rated commercial-mortgage-backed securities.

The problem for the industry is that between now and 2013, more than $2 trillion in commercial mortgages, which typically have a five- to 10-year term, will need to be refinanced, according to a July report by Richard Parkus, head of commercial mortgage-backed securities at Deutsche Bank AG. It is not turmoil in the capital markets that is causing the bottleneck, but rather the fact that properties are not worth enough to retire the old debt in a refinancing.
Can you say Underwater

LINK TO LATES GOVERNMENT INFO ON H1N1:
http://www.cdc.gov/H1N1FLU/

LATEST H1N1 NEWS

Cruise lines, CCL and RCL have broken the daily 50 SMA, a short from the Transportation Index double top, and sell from H1N1. This fear starts with the beginning of the cruise season, that starts now.

Obama Declares H1N1 Flu ‘National Emergency’
The White House says the declaration allows medical treatment facilities to better handle a surge in flu patients by waiving federal requirements on a case-by-case basis.
President Obama signed a proclamation declaring the H1N1 influenza a national emergency, giving doctors and medical facilities greater leeway in responding to the flu pandemic.
Obama signed the declaration late Friday, which the White House said allows medical treatment facilities to better handle a surge in flu patients by waiving federal requirements on a case-by-case basis.

Four shots:
New this week, some health officials say children under the age of 9 who have never had a flu shot will need four shots. This includes two seasonal flu shots and two H1N1 shots.

The U.S. government also warns that due to increased H1N1 screening procedures in China, anyone who is suspected of having H1N1 or has traveled by air with someone suspected of having H1N1 may be quarantined by the Chinese government for an indeterminable amount of time.

OUR MARKET TRIGGER FOR A REVERSAL LIST

What will trigger a good market drop?
There are likely 3 or 4 high probability events.

One, a Fed decision to start raising rates.

Two, a large reversal in the US$, likely caused by a rate increase in the USA.

Three, an international event such as an attack on Iran by Israel. That would like sky rocket Oil prices, Precious Metals, and anything imported into the USA.

Four, a H1N1 explosion of infected school children. And company workers getting sick that cause businesses to shut down.

Five, the final realization that unemployment goes over 10% ,and the foreclosure rate explodes enough to cause the banks to drop sharply, and pull the markets down with them.

I am sure there are several other events, but these are my top 5 picks.
I will again join you on the TOS and TCNET chat Tuesday