Yep, as we worried, all it took was a mere brush with resistance today to send stocks back into the red. While some bulls will accurately point out none of the indices have actually broken under a key support level yet, we're going to stick with our bigger bearish bias for the time being. We got another clue that the undertow is pulling stocks lower with a little more force than the recent action might indicate. First though, an answer to a question from a readers. Peter writes: Just a follow up on your view of precious metals prices, particularly silver. Other than last Friday's drop, prices have been on the rise, including today. Do you still maintain your position that silver will drop to the $18 area (possibly $16) before bottom is found? Thanks for the question (and thanks for giving us a reason to follow up on a prior call we made). Simply put, yes, I still think $18 is in the cards before silver can start a recovery. I know the last several days haven't suggested silver's headed for more trouble, but when you take a step back and look at the bigger picture, I think you'll see what I'm talking about. Let's start with the longer-term weekly chart. As you can see, although the selling has slowed the last couple of weeks, it's not like it's reversed. And, it's going to have a tough time reversing unless it can find a floor to push off of. That's not to say it's impossible to rebound without a floor, but it'll be tough. So where did my target of $18.00 come in? That's the mid-point of all the erratic movement we saw from silver in 2009 and 2010, right before silver got catapulted to just under $50 per ounce in mid-2011. See, former congestion points have a way of becoming congestion points again. The $16.40 area - and now the $19.40 area - are also potential floors, in that they were the upper and lower edges of all that turbulence in 2009 and 2010. While the $18.00 mark (red) is the most likely floor, we'll be watching the other two. [My chart is a chart of silver futures, which reflect the price of ten ounces of silver. For the per-ounce price, just divide the values on the chart by ten.] Things get a little more detailed when we look at a daily chart. For the time being, and until further notice, silver is being squeezed into a narrow range. The bottom of that range is the recently-developed floor at $22.06 (dashed), while the upper side of the range is the falling 20-day moving average line (blue); silver has been pressured lower by it since early May. It's possible that the floor could win this battle, and shove silver above its 20-day moving average line... which could jump-start a bigger rebound. Until it actually happens though, we have to assume the current trend is still intact. If the floor at $22.06 should snap, well, I've got a bad feeling that could mean a big pullback in short order. In the meantime, silver is on hold. Just be ready to move, because the trading range on the daily chart is getting awfully narrow. Another Step Closer to the Cliff Before I say anything technical about the market's current condition, let me preface it by saying this - right now, traders aren't sure about what's next, and as a result are uncertain about what to do. That waffling is impacting the way the market is moving, but even with all that erratic movement we're drawing some important lines in the sand. We just have to be patient. OK, on with it. Take a look at today's high from the S&P 500. It was right at the 20-day moving average line. All it took was a bump, and down she went. It matters, because that same 20-day moving average line had been acting as support up until Thursday's meltdown. Now that it's a ceiling, it could be a ceiling for a while. It's not like the bears are exactly in the catbird's seat here, however. Problem #1 for the bears: There's still a very good chance the S&P 500's lower Bollinger band - currently at 1619.65 - could act as a floor if tested this week. Problem #2 for the bears: The VIX is trying its best to pull back, having formed two upside-down hammer-shaped bars today and yesterday. As long as the VIX is able to fight its way lower, the broad market's got a good chance at moving higher. The bottom line is, we've got to wait and see whether it's the floor or ceiling that cracks first. From a momentum perspective though, the downtrend is still intact. For however much it'll help you, here's a look at a long-term (weekly) chart; it will put the daily chart in perspective. When you take this zoomed-out look, it's pretty clear how overbought the market is at this point, and how much room there is to tumble. It's the weekly chart of the VIX, though, that we suspect will tell us when the market actually falls off the edge of the cliff. Just wait for the VIX to hurdle its falling resistance line (blue). That'll be the beginning of the end. If and when it happens, it will likely coincide with a clear break under support on the daily chart (around 1610). Of course, if the S&P 500 does manage to break its current downtrend and move above the 20-day moving average line, we'll have to go back to the beginning of the breakdown process again. We'd be the first to tell you it's all more than a little messy. But, it is what it is. We don't get to pick the market environment - we just have to navigate the one we're given. Stay with us, and we'll keep helping you do it. Anyway, several more of you have taken the opportunity to post a buy or sell rating on a stock, making you one of the inaugural contributors to the SmallCap Network stock rating system. Let's keep that ball rolling by casting votes for one of the market's heavily-watched names of late... VirnetX Holding (VHC). Click here right now cast your ballot. If you didn't happen to catch what the SCN stock rating utility is all about, here's the full explanation. Good stuff.