The Dow Industrials fell for the fourth straight day yesterday, and the S&P 500 suffered its ninth loss in 11 sessions. Stocks were strong at the opening bell, seemingly ignoring the concerns over Greece, on a report of strong housing starts. And the minutes of the Federal Reserve’s policy-making committee gave false hope when Fed officials denied that a QE3 might be in the wings.

The early morning gains evaporated by midday, and stocks took a downward course until the closing bell. At the close the DJIA was off 33 points at 12,599, the S&P 500 fell 6 points to 1,325 and the Nasdaq lost 20 to close at 2,874. The Big Board traded 872 million shares, with the Nasdaq crossing 503 million. Decliners outnumbered advancers on both exchanges by about 2-to-1.

The confirmation of a double-top breakdown on the S&P 500 occurred when the index closed under its support line, now resistance line, at 1,343. On Monday we discussed how I arrived at the target for the current decline — the support line of 1,264. Support also is psychologically strong at the 200-day moving average at 1,277. But these numbers aren’t static.

If downside volume picks up and volatility continues to increase, that support line could easily be penetrated. Since we work on statistical probabilities and not certainties, it is wise to consider other possibilities. The 13th century mathematician Fibonacci discovered that a numbers sequence occurs in nature which may be applied to virtually any sequence, including the movement of stock prices. Two Fibonacci numbers when applied to retracements of trends are 50% and 61.8%. Applying those to the closing low of Oct. 3, 2011, at 1,099, to the closing high on April 2, 2012, at 1,419, produces targets of 1,259 (50%) and 1,221 (61.8%).

In just a few weeks the S&P 500 has fallen almost 6% and is down nine of the past 11 sessions. Nevertheless, the above chart’s bullish support line at just above 1,200 is far from being penetrated.

And so the message is this: Even though the short-term and intermediate-term trends have reversed, the major trend still is up. There will be rallies that will draw in the unsophisticated bull, and sharp declines that will convince investors that we are in a bear market, but the followers of technical analysis have a valuable tool that enables them to visualize where the market, and individual stocks, have historically held or folded. With proper discipline, this gives us the edge over investors who solely depend on pure fundamental analysis.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.