First off, my thoughts and prayers go out to all those injured or affected by the explosions at the Boston Marathon today.  For those of you that have been following Right Side of the Chart for some time, you have likely noticed that my in goal to provide streamlined market analysis, I typically avoid commentary on politics, religion, personal stories, etc.. topics unless they may have a direct or indirect impact on the markets. With that being said, I probably won’t make any additional mentions of the tragedy that took place today which hopefully, the worst is over and there will not be any follow-up incidents or injuries beyond those that have already been sustained.  Again, my thoughts are with the victims & families of those who may have been affected by this tragedy.

The reason for this post is to share my take on the markets at this point in time in light of today’s events.  First off, and most importantly, do not confuse today’s events at the Marathon with the sell off in the US equity markets.  Yes, those events may (or may not) have exacerbated any selling this afternoon but from what I can gather as I just returned to the office, is that these explosions took place shortly before 3pm ET, after today’s sell-off was well underway.  Yes, there was some additional selling since then but as far as the technical damage to the charts (or what I view as confirmation to the bearish scenario), it was already firmly in place as the bulk of today’s losses came before the explosions took place (as I type).

Again, the main point of this post is to reiterate my thoughts that based solely on the technical evidence, the charts point to more downside over the days, weeks and possibly months to come.  Although my guess is as a good as anyone’s as to how this incident might affect the stock market going forward, the downside risks to the markets continue to outweigh the upside potential due to a several factors that have been stated here recently including, but not limited too:  Prolonged extreme bullish sentiment and complacency measures; Significant negative divergences on the longer-term charts as most major indexes struggle with multi-year resistance levels and/or make only marginal new highs; Continued deterioration in the macro-economic fundamentals while likely signaling the latter, if not final stages of the business cycle (an economic expansion becoming long-in-the-tooth); Diminishing effectiveness of Fed policies to lower rates and spur economic growth; etc…

I know that bearish prognostications are not popular with the masses and especially not so far in 2013 as the market has seemed to defy any bearish technical or fundamental evidence as it has shrugged off any negatives and continued to march higher essentially unfazed.  Whether you are bullish or bearish at this time, stay flexible and do not fall victim to the believe that the market won’t or can’t do this or that.  We still have quite a bit of work to do on the longer-term charts in order to firm up the bearish scenario although that “work” or evidence could come much faster than most expect.  I’ll most likely put together a video discussion of the markets this weekend, possibly sooner if we start to see the selling accelerate and break through some key support levels.  Remember, stocks typically fall much faster than they climb so for those long, be aware that weeks or even months of gains can be wiped out in mere days.  Make sure to use stops to protect gains and do not fall in love with any position.