Current Long Positions (stop-losses in parentheses): None

Current Short Positions (stop-losses in parentheses): None

BIAS: 100% Cash

Economic Reports Due Out (Times are EST): Durable Goods Orders (8:30am), Jobless Claims (8:30am), FHFA House Price Index (10am), New Home Sales (10am), EIA Natural Gas Report (10:30am), EIA Petroleum Status Report (11am)

My Observations and What to Expect:

  • Futures are moderately down heading into the open. 
  • Asian markets were mainly down in excess of 1% (China was up 0.6%), while European markets traded moderately lower. 
  • Yesterday marked the first follow through to the downside these markets have seen since November! 
  • The long-term trend-line dating back to 9/1 yesterday was broken, which dramatically changes the scope of this market. 
  • Volume was strong yet again yesterday. 
  • A new “lower-low” would come from a break of the 1/28 lows at 1275. If we break that level, we are in a confirmed downtrend. 
  • S&P 1300 level will continue to provide some support in the near-term as buyers provided support at that level yesterday. Next support level after that is the 50-day moving average at 1286. 
  • The market could see a dead cat bounce in the very near future, allowing for a quick profit opportunity to the upside. 
  • For the bears – Continue to push the markets lower, and in particular, close below the 1300 price level today. 
  • For the bulls – Look to see whether the dip-buyers are going to come in here soon to repair some of the technical damage being done to the charts – for starters, push price back above yesterday’s highs. 
  • My conclusion: Momentum is in the bears’ corner right now, but with any sell-off there are a myriad of dead-cat bounces along the way. From the short side, I would start locking up gains, and look for better entries going forward. 

Here Are The Actions I Will Be Taking:

  • Trying to short this market after the move that we have seen over the past two days has a “chasing” feeling to it, and would rather short weak-volume rallies. 
  • Will look for some opportunities to profit off of a short-term bounce in the market by jumping into some solid long plays. 
  • Last couple of days I have been day-trading this market with mild success. 
  • Follow me in the SharePlanner Chat-Room today for all my live trades and ideas.

You Might Like

  • South Korea and its impact on the US stock market.

    South Korea: The Hidden Driver of US Tech Volatility

  • Learn to trade within your means.

    Stop Trying to Hit Home Runs: Start Trading Within Your Means

  • Avoiding traps on stock breakout plays.

    How to Trade Breakouts Without Getting Trapped