After the 30-minute SPY view in my previous post, let’s take a look at a 3-minute chart of today’s action heretofore. The market just made a fresh daily low as I am writing this, as the longs playing for a re-break above the 1335 S&P 500 inverse head and shoulders bottom neckline are likely feeling trapped and starting to the exits. A close on the lows would not surprise me, given the apparent break of the intraday consolidation I have outlined for your below after the initial gap lower at the opening bell.
Breadth is also starting to deteriorate, and I have been warning about some crowded trades in the better-perforiming parts of the market such as biotechs and select tech. As of right now, I see financial and technology stocks leading us lower. Beware of pockets of hot momentum in corrective markets, as they tend to fizzle quickly with no compassion for honest traders looking for some action.
As you have been for about two months now, it pays to be a bit paranoid in corrective markets given the amount of traps that lurk behind every tick.