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Last night's talk was of hints at an end to QE causing the US indices to sell off. As usual, this sort of fundamental event coincided with a "perfect storm" of technicals in the S&P so who knows what the cause really was?

Looking at the daily chart we can see the S&P has been in a lovely channel upwards since Nov 2012 and last night it hit the channel top and the 161.8% Fib extension of the move up from 4 June 2012 to 5 Oct 2012 - the 2 waves on the lower left of the channel.

The question now is: is the move up from Nov now complete?

The fact that it hit the 161.8% extension suggests that it is done as that's the normal target for a wave 3, however, this extension can be exceeded (or even not reached at all) so is there anything else? Well, clearly this wave from Nov has been long, strong and extended, just as we'd expect for a wave 3. An extended wave ought to have 9 (or even 13 in the case of a double extension) subwaves and this move only has 7.

This suggests to me that last night's sell-off ought to continue, but not too far, before a final wave up for this sequence. We'd then be due a longer correction - the wave 4 belonging to the whole sequence up from June 2012. This ought to last a few months. If the current move is complete then that longer retrace will already have started. The clue will come from looking at the Dow chart.
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