As a technical analyst I love it when independent chart patterns suggest the same resolution in the market. I’ve been highlighting two important chart patterns over the past month that will tell us if the market will eventually resolve in a rally or a decline. Yesterday both charts broke below their trigger lines suggesting a fairly large decline is ahead of us.

The first chart is of the S&P 500 Index (SPX). It has been painting a tight line for most of the year. It finally fell below the bottom of the range. This break projects a minimum downside target of 1940 which would be about a 9% decline in total. I’m guessing that we’ll finally get the long awaited 10% projection.

The second chart is of the Dow Jones Industrial Average (DJI). It has been painting a rounded top pattern. Yesterday it broke below 17075. This break projects a minimum downside target of 15825 which would be a roughly 13.5% decline.

From a Dow Theory perspective a decline to 16390 would meet the minimum criteria for a new secondary low. The last secondary low was in November of 2012 so a new low would be very significant because it would raise the floor for the market turning from bullish to bearish from about 12800 to the point where the current decline ends.

For the transports (DJT) the minimum decline needed for a new secondary low is 7775.

Taking a look at a longer term chart I wouldn’t be surprised to see the decline carry to the October 2014 lows or the 38% Fibonacci retracement level from the last secondary low. The decline probably won’t happen in a straight line. I’d expect a few dead cat bounces along the way. It’s time to hold on for a wild ride.

Note: My market risk indicator is currently signaling, but I wait until the last hour of the day to make an official call. I’ll make another post near 3 PM Eastern with the official call. If it is still warning all of the portfolios (with the exception of the Long/Cash portfolio) will be aggressively hedged with put options or a volatility product.