Our thoughts heading into this week were as follows:
Take out last weeks highs and creep higher until eventually heading lower in the coming weeks.
That’s it.
As you can see we popped up Monday and took out last weeks highs just briefly. As we came into today the futures shit on us and we opened down 1% and we were subsequently left to die helplessly all day. The slow bleed-out of death.
Is that it? Was Monday’s “rally” all the market could muster?
Now, I’m not a perma-bull nor a perma-bear. Frankly, I couldn’t careless where the market goes, I just want volatility. But, IF (big IF), yesterday’s action was all we can muster – it’s time to start protecting yourself. As of right now all time frames (Daily, Weekly, Monthly) are lower than they opened. Therefore, bias’ are to the short side.
As I’ve said for a week or so now – the lows from February are a huge level that we must hold (if you are in the bull camp). If we do hold them, we can assume that we will be inside month for the month of February (the trading range for February will be completely within the January range). An inside month now provides us with an ‘actionable signal’ as we call it — an equilibrium. Best case for the bulls is we go inside month in February, then take out the February highs in March.
BUT – if yesterday’s rally was all we could muster in the short term, then this will get ugly quickly. As you can see in the 60-minute chart below, we see defined support around 186-187 in the SPY. Barring some preposterous gap up in the futures overnight (don’t count it out, I’m pretty sure the futures guys are on acid), this market get’s heavy very quickly.
REMEMBER:
China Sucks.
Look at the FXI Chart. We have already taken out last weeks lows and potentially can take out the February lows. If FXI takes out 28.80 to the downside, you bet your ass the US markets will follow suit.
