Economic Reports Due Out (Times are EST): International Trade (8:30am), Jobless Claims (8:30am), Import and Export Prices (8:30am), Bloomberg Consumer Comfort Report (9:45am), Ben Bernanke speaks (11:45am), Treasury Budget (2pm),
The Breakdown:
- Futures are significantly higher prior to the open
- Huge sell-off yesterday, the likes of which we haven’t seen September. Engulfed the previous 4 trading sessions and their ranges.
- Look for there to be a test of support at 1215 on the S&P.
- S&P also broke the 20-day moving average, which I believe was significant, yesterday. The MA had represented a descent amount of support for the past month.
- The next level of support comes in at around 1197-1199.
- Volume was much stronger yesterday than usual.
- I covered my entire SPY short position yesterday, not because I believed we had fallen as far as we would, but because the market is very schizo these days, and didn’t want to be hit by a sudden short squeeze in the afternoon session of trading or in the next day’s trading.
- Even if this market decides to continue marching lower, you can expect a ton of rallies throughout, before it gets to where its going to settle. If you can stomach those rallies…fine. If not, you need to become a pro at consistently covering in weakness.
- S&P is back below the neckline of the Head & Shoulders pattern from the past year.
- Worth noting as well, (See Monday’s Trading Plan) is the obvious head and shoulders pattern forming on the weekly chart. Should this be the case, I’d expect then that this market is reaching a short-term top very fast.
- Volume continues to dry up, and bulls seem to be losing their steam in terms of aggressively buying this market.
- Make sure that whatever you do, that you protect the gains that you have, and be ready for sudden and quick reversals in this market.
- My Conclusion: From the broader perspective I remain fairly bearish on this market, and believe that the rips should be sold going forward. A move back above 1277 would be a major victory for the bulls though.
