Selling to Resume Next Week?

The market bounced back as I expected but 1294 support did not hold so the Descending Triangle pattern is out. I think the counter rally will continue on Monday (and perhaps Tuesday?) until it hits the rectangular red area on the chart. There lies couple of trendlines the market will most likely test, the Trend Average and the 1313 resistance. So I am assuming the market will reach this area and resume another leg down that will challenge and most likely break the low put in today. I think the main level many traders will be watching is the 1275-1280 area, this level must hold if the bull market is to resume. I sold all the longs I bought at 1295 and will be selling more long positions as we approach the TA and then turn net short again. The only way I will change my mind about another leg down is if we get a very bullish wave to repair the damage done yesterday. With general sentiment down due to global turmoil, gas prices and now the earthquake in Japan. I think the most likely outcome is a prolonged correction.

One article I found important today was JP Morgan's cutting GDP forecasts. To me it is the obvious outcome of oil at these levels in an economic recovery and I think this will eventually show up in stock prices as well. So perhaps stock buying mania (like 2 weeks ago) will be back soon but the economy will be facing challenges later this year and it is better to be alert than be blinded by optimism.