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If you listen carefully, and observe this action closely, we’ve done this before.

Check this out…

I am not usually this desperate for trading signals, but the only other time in my life that I have blogged this stupid index was back on July 31st of this year. Same back drop too. Top callers, top shelf hindsight analysis weighing down the chatroom, and the same level of anxiety and discouragement.

Compare the chart of the market and all the same signals we had back then. All too familiar.

It’s almost over. Rest up for battle.

OA

These bouts of discouragement each time the Russell bottoms (May, August) is pretty easy to read. Let me show you how to do it.

First, think of what you like to do on bounce days…you like to chase the market up. Leaving yourself vulnerable to market weakness. You then think “Good hell, what a weak bounce!” So you short into the hole. Dumbass.

Last Monday, markets were off by about 1.5% a piece. I put out the same idea; what hurts the most participants? That day was similar to today. Think about all the dip buyers from yesterday all stopped out today. Think of those that shorted into the hole here as well. What move hurts the most?

If your bias is long, do what we did yesterday. We went with the approach that less is more. Didn’t do anything. We just watched longs from Tuesday do work. Those longs are still holding well, despite this sell-off. Since we didn’t follow the crowd up today, I prefer taking action on days like today.

There are a few things we like to see to establish tradeable lows. Positive divergences in risk, initiative buyers, and valid oversold signals. We’ll hit each one of these items this afternoon.

Speaking of which, I am offering a free trial to After Hours with Option Addict for the remainder of the week. Come join us to evaluate your trades, chat about the market, or just hang out and listen.

Click on this After Hours with Option Addict link to participate.

OA

The “sell the rip” guy couldn’t be happier this morning, as those that chased the market up yesterday are under pressure into this gap down. As mentioned yesterday, this was the move that hurt the most coming into today’s session.

We’ve yet to see the $NYMO close under -80 yet, but were closing in on it as of this morning. So long as breadth avoids extremes, and growth stocks like SPLK, FEYE and the like are maintaining a bid, I’m shopping to pin the low.

OA

Personally, I think the move that hurts the most here is a gap down tomorrow.

Each time the Russell has bottomed, it was not an event, it was a process. Last time the Russell bottomed in August, it had taken on a tone of relative strength (upward consolidation) where the SPX, DOW and NASDAQ sloped lower that week.

I liked how growth stocks didn’t follow the market lower yesterday, and with a small sell off at the open they did not follow the market to its lows. They’ve got to maintain that posture here, and the Russell needs to start outperforming soon to the upside (day to day comparisons).

The lowest reading I saw this morning in the $NYMO was -79. As you all know, that has been my go-to dip buy indicator most of my life. It’s rarely failed at telling me where there is limited downside in the tape.

If we open lower tomorrow, are you buying? If so, top pick?

Chatter of $35 for SUNE from GE got solar stocks perking today, despite this weeks BEAR DAGGER to the heart of many solar stocks.

I will never, ever, ever let you forget this moment…for the rest of my life, should I claim victory here (FSLR). Just sayin’.

I bought October SPLK calls, because surely that should be the first stock to go down when stocks crash. I am also watching P, FLTX, and Z.

OA