Last week produced biggest weekly drop since early September 2009 and that itself is a valid reason to evaluate charts.
To make it clear, system is still long on weekly chart. Entry was in July 2009 around 21000 and trade is in profit so far with approximately 3500 points accumulated in 6 months.
Market turned its downslide in March 2009 and never looked back. After some 10000 points rally market progressed all the way to 25936, right up to 61.8% retracement level - if drawn from top in June 2008 to low of March 2009. Previous major high (August 2008) is very close to turning point. There is rising wedge on first chart that broke last week, with target around 20000, if it plays out as it should. RSI and Stochastic did not show some massive negative divergences on the way up, but trend line on RSI is broken for now.
Second chart shows bigger picture. Top 40 weekly chart (from mid 2002) is shown. There is long trend line (thick green line) from 2003 that was tested 4 times so far. In recent times this trend line played support in December 2008 and March 2009, and that stopped Top40 from drooping further. What else seems obvious on that chart - 26000 is not only double resistance based on first chart as there is even 23.6% retracement level for the bull market which started in April 2003 and ended in Jun 2008. That makes 26000 triple resistance and Top40 could not breach it first time. Finally, there is clear support just below 23000 (black horizontal line) that was tested 6 or 7 times so far.
Conclusion is that Top40 dropped a bit last week, but nothing yet suggests we are going to see similar drop to one from mid 2008. Healthy correction is very welcomed at this point of time. Will follow weekly perspective and report if something changes.
Trade with trend!