Well, I was in majority cash yesterday so I didn’t feel the bite. I’m ready to go long again once we hit the 20-day SMA. Any break from that level, then it’s 100% short for me. We gapped down today, but it was only -100 pts on the Dow, initially, and the fact that we weren’t able to fill the gap in the first 30 mins was a big warning sign. I asked my coaching students to stay in cash this morning and for good reason – the market appeared weak and needed a rest. That doesn’t sound too technical, but that’s how it was and you can call it whatever you like.
The major break came at around 982-983 on the SPX. After that, we formed a bearish continuation flag for 4 hours until we once again broke down. The people holding here are the ones that only “hope”, but it doesn’t make sense to “hope” when you’re in a bearish continuation pattern, does it? Then, the market sold off rapidly in the last hour of trading. No one should be surprised about that – we were already in a downtrend since the beginning of the day.
Tomorrow, pay attention to all the short-term 20-day SMA support levels. It may be an opportunity to buy up, or in case of failure, to short like crazy. We have a slew of economic reports, so keep your eyes on those.
Oh yea, whoever wanted the cat, here’s two for you (both describe today’s action):
SPX 1-day
SPX 3-day
SPX 10-day
SPX 6-month
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