S&P Analysis & Cancel the SSO Buy Stop Order

Click on the Chart to Enlarge

Just for clarification.....

The buy stop was not hit from the prior post. I am not suggesting carrying this over to tomorrow. Bears are clearly in control short-term based on today's candlestick. I will have to see some stabilization/divergences start to show up before considering a bullish trade. From the charts, there is not really any new support until about 100.00 on SPY. I will either need to see further declines down to support to go bullish short-term, or see a bounce to go bearish.

The chart above shows what I think is a reasonable expectation (in pink)for the next 2 weeks. The main notes are on the chart. As frequent readers may recognize from past posts, I always look to the first support (beginning of the last "wave" up) once a top has been made.

Does the market retrace to that level explosively or lethargically? If explosively (decline takes less time than the advance) then you are often witnessing a significant trend change.

Also, very often the market will provide a nice short-term trade entry as the first support is breached. That is often true even if the market moves to lower lows later.

If the market continues to decline, that will likely be coincident with some gains in the US dollar which will boost the EUO position.

While it is contrary to my trading style to be get more bearish as prices fall, there are times when markets breakout or breakdown where that is justified. After looking at many charts of select stocks and some other asset classes, today seems like a real breakdown to me. If so, I wouldn't expect a strong rally attempt until the green box noted above in the chart.