I don’t have to tell you that today was ugly (unless you were in the Boom Factory and played some TZA today) as most traders continued to move out of securities and into cash/safe havens on fairly significant volume.
Fear loomed as the SPX closely challenged 1040 until finally the succumbing to the pressure with only 30 minutes left in the day. It was like a black hole – you can circle it all you want, but eventually you’re just going to lose out to the overwhelming gravitational pull.
However, once we did plummet into 1040, we opened our eyes and realized that 1040 may not guarantee doom and gloom. With this eureka, a few buyers came in just before the bell.
But, are we safe? Is 1040 now in the rearview mirror or will we continue to swirl around the black hole just to ultimately give up and fall hard and heavy? That’s the real unknown – now that the technical traders have finally found 1040, what are the they looking for? Oversold stocks ready to bounce? Stocks to short? Does the market view this as support or just the door to the abyss below? We’ll know soon enough.
Quick look at the SPX –
· The lower lows on the daily candles
· Way too many test of horizontal support. Market really wants to take it below 1040
· Today’s volume – indicates that traders are not as willing to hold here and are doing whatever it takes to sell before the close
· Finished today near the low. Yes, we did manage to bounce back up above 1040 with only seconds to spare, but I’m not convinced.
What next –