My hourly chart analytics of the SPY shows this morning's plunge from the 129.00 area precipitated by the negative reaction to the CPI report.  The plunge to a new reaction low at 127.36 should represent the final downmove within the larger corrective downleg off of the May 2005 high at 132.80. While we must leave open the possibility of yet another loop to the downside into marginal new low territory, for the most part, my work argues that the entire corrective leg is over, and that a recovery rally phase either already is in progress or is nearing emergence.

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com, a real-time diary of his technical chart analysis and trading alerts on all major markets. For more of Mike Paulenoff, sign up for a free 15-Day trial to his MPTrader Diary by clicking here.