Bring On The Carnage
Yesterday I probably should have given more credence to the possibility that we may get follow through to the downside for the mere reason that none of the bears saw this one coming (we did – cough cough) and are probably either faking it at their favorite watering holes right now or are busy outside kicking a tree. My money is on this guy:
See, you can’t blame him – he really doesn’t like bananas. Now seriously the continuation lower today changes things considerably and I’ll tell you why. We should have had our bounce, then a drop lower toward support, then a final scare and finally it’s back to business as usual. What happened here is going to pop a lot of stops and leave folks rattled. When the invariable dip buyers finally show up they will be easy pickings for another leg lower – in other words today’s continuation kicks open the door for a medium term correction.
There is of course no predicting how far we’ll drop but the next logical support zone is near SPX 1920ish plus minus a few handles. Please refer to yesterday’s update if you don’t remember why. Although I don’t enjoy making lofty predictions I have pointed out a possible scenario which I call Soylent Orange (anyone remember those days?).
The only remaining equities setup yesterday was the TF and if you grabbed it you just earned yourself one R. I would probably take profits here at the EOD and call it a day as its other three brethren are rapidly falling toward their respective support zones.
I’ve said it before and I’ll say it again – betting against the Dollar near important inflection points always is a good trade. Not much else to be said here – I still have hopes ole’ bucky can push higher but who am I kidding?
Coffee is looking pretty good here as it’s retesting its 100-day SMA and if we get an IP-S tomorrow I’ll take that one. The long side here does not interest me right now.
More below the fold for my intrepid subs – we had big moves across the board but I managed to eek out a few promising setups:
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Have fun but keep it frosty!