Wow, that was quite a day. Market heard the debt deal, and decided it didn’t like what it heard and sold off hard.
Let’s take a look at where the day ended.
SPY broken the 200MA and then kept going. It finally stopped at prior support (marked on the chart by the green line). As I’ve said before, this is my line in the sand. We closed a little above it — so I could see a move down to really test it tomorrow. We’re also at a key Fib level here –“ the 161% extension. I’m expecting a bounce.
Here’s the chart I’m really interested in. First up — McClellan Oscillator at -180 or so pretty deeply oversold. More importantly, let’s look at the percentage of stocks in the S&P 500 that are below their lower Bollinger Band, and the percentage of stocks with RSI2 readings of less than 10. The former is at great than 70% and latter is at great than 80%. Both are at points that have historically been correlated with a bounce.
I took more long exposure at the end of the day — I’m playing for a bounce with a tight stop below the key support level at $125.28. I’ll play it for a small bounce — there is nothing to indicate, as of yet, that the market is ready to turn around. So I’ll play the bounce and then look to unload and perhaps look short. I’m keeping an eye on SH for a breakout — it’s threatened many times but so far has not done it. That’s all for now I hope you’re trading well in this difficult environment.
