Seeing some signs!

Another day of drop leaves us off another 2 and 1/4 percent lower in the $SPX, but only 1.8% in the $NDX.  This residual strength is a good sign for the bearish case, whether it be triangle or completed 4th.  We should be looking for a decent bounce in the near future as we have fallen nearly 80 points in $SPX from the 1/6 high to today’s low.  If we do not get any bounce, that would be a good indication that wave 5 is indeed underway.  If we do get a bounce, it would be a good place to add to shorts before the $VIX gets carried away again.

A good indication that we are in a phase of serious decline is the major sectors taking a beating.  Check out the Ag stocks today… POT down almost 12%, CF down 13%, AGU down 10%, BG down 7%, MOS down 11%, TRA down 16%.  There are some pretty big names in there, and these guys usually take off a little before the rest of the market.

The $VIX has turned up nicely from one of the long tested support levels at 37.50.  Up 30% from there, we can take this as another indication that a major bear phase is underway, or very nearly so.

I will throw a few names out for the bearish case that are starting to look good.  PCP, CCJ, CE, BIDU, GRMN (possibly some chop before the next drop), MA, GS, CMI, X, and CLF.  Also, be sure to watch the banks, they are a tell tale sign.

That is it for tonight.  Forecast tomorrow is for a bounce of some sort (possibly for 2 – 3 days) followed by more decline.  Good night!

Skål!