LET'S LOOK AT THE S&P 500 DAILY CHART

Two weeks ago on Squawk Box I indicated a top was possible for Monday (August 9th) and price would not exceed 1134. But I also felt the dominate cycle was running out from low so if there was a high on the 9th - a low should have occurred on the 15th from 45 calendar day from low. Both of those circumstances occurred. Yesterday the index fell from a rally of two days. The normal counter trend in this circumstance is 1 to 4 days so a new low would indicate trending down. But there are a few other things that can occur now. The index can test the last high again and turn down, if that occurs it is very bearish leaving a lower double top after a lower double top.

There are two support levels, the first is the price of the July 20th low at 1057 that would be bullish and leave a higher double bottom and is "obvious" support and could be a trap. Then the lows that allowed for the false break low in July or around 1040. The key is the 60 day cycle around the 1st of September unless the second lower double top appears, as that would indicate a more serious decline. A move down into 60 could be a low for a move up into first of October. A move up into the first week in September can be a significant high or top. The next few weeks will define if this is a bear campaign in progress.

LET'S LOOK AT THE WEEKLY CHART

The index corrected down from the April high to the 3/8 retracement level. That is a very important retracement to all markets and keeps the trend intact or will be a low to a distribution pattern. A lower double top is a very bearish distribution pattern if valid and that has not yet been confirmed. The fact that the rallies only moved to a 50% retracement is very weak and it is difficult to believe the index is this weak. But if the lower double top is confirmed then this is a bear trend and 943 is the next stop. IF support is show at 943 the index will rally back to the 3/8 level. But I'm getting ahead of myself since the bear campaign has not been proven yet. My forecast calls for no completion to the bear campaign until end of 2012.

LET'S TAKE A QUICK LOOK AT THE FTSE 100

I made this report yesterday for today but I was a day late. But look at the amount of distribution 3 days down and 6 days later it was still struggling against the previous spike -- 3 versus 6 a top. Remember the normal counter trend in a fast trend is 1 to 4 days and the last rally was 3 days so this could be trending down. This may also be running a 144 cycle and I've laid out the important time periods of that cycle. 72 days around the 1st of September and 96 days on the 5th of October. If there is support at 50% it will bounce back to 3/8. This should at least test the low of July 20th.