Here is a daily chart of the cash S&P 500 for 2010. The market made a bull market high near 1227 in early November and since then has been moving lower. I see this drop as a correction within a bull market trend.
The 200 day moving average (red line) continues to move higher and stands below the market at 1133. This is good evidence that the bull market remains intact. The S&P is currently hovering at its 50 day moving average (blue line). Buying opportunities in a bull market generally arise when the market drops a couple of percentage points below its 50 day moving average but remains above its 200 day moving average. I think just such an opportunity lies dead ahead.
If the second leg down within this correction equals the length of the first it will end near 1150 (blue rectangles. This is also the current location of the lower channel line in the green dotted trend channel I have drawn. The purple, rising trend channel has its lower boundary at 1140 currently.
There is even more support in the 1125-1150 zone than this. The midpoint of the advance from the late August low is at 1135. A drop from the November top which equals the length of the last big reaction in August of 2009 would carry the market down to 1135 also. And the breakout level from the May-August 2009 head and shoulders bottom formation is at 1127 (green dash line).
So I think there is very good reason for expecting this reaction to end in the 1130-50 zone, probably closer to the top of this zone than to its lower edge.
Once this drop is complete I think the S&P will be headed for 1300.