Well, I must admit at the very beginning of this post dear readers, that I am surprised by how quickly the bears too control of MA(200) today. I did expect them to break through it eventually but certainly not so easily. Next support - 1160 level.
As important as this break of MA(200) might prove to be dear readers, I would still rather be in cash here than starting short positions here. And I will tell you why. These days, with most of the trading been done by computer algorithms, the moving averages are obvious places to run over and eat up the stop loss orders just below it. The perfect bounces off MAs that technical books talk about are a rarity these days and as I am sure you readers must have observed there are a lot more false breakouts and bottoms these days. And the McClellan Oscillator, for whatever it counts, is making record lows. Considering all this, I would rather wait for an unsuccessful test of MA(200) to start a short position rather than jump in with the crowds over here. Expect the unexpected - that's the name of the game.
Take care and good luck! I sincerely hope all you readers have not been hurt too much by this recent drop. Specially all of you close to retirement, I hope you learns the lessons from the 2008 crash and shifted to to stocks/bonds conservative portfolio rather than just being long equities.