Taking the Steps Down

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The above 30-minute chart of the SPY stretches back to last week’s breakdown from that widely-watched symmetrical triangle. You can see that the move lower has essentially seen the market taking the steps down, although at times it sure has felt like an elevator with these morning gaps lower. Either way, the chart illustrates the essence of a downtrend on that particular timeframe.

Moreover, breadth is soundly bearish, and the Euro continues to weaken along with global risk appetite. Accordingly, discretion is the better part of valor in terms of resisting the urge to aggressively position for a bottom. Given the challenging market, capital preservation is a concept that I have discussed more than usual in 2011. It is easy to talk about those concepts in the abstract, but actually obeying them in practice presents its own set of challenges. For now, in this high level chess game of a market, I am focused on not making major blunders rather than playing  for a checkmate.