S&P Update

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The current trades are going basically as planned right now. The next step I will be looking to do is to move the stop on DXD to a breakeven point. Depending on what tomorrow brings I may opt for doing the same with SPXU and holding it. As I've noted several times in recent months, I expect the initial move down from the highs to be sharp. I wouldn't expect the highs of the last day or two to be exceeded prior to the break of next support. That is 3-4% lower on the S&P which is about another 10% gain down from today's levels on SPXU.

Now tomorrow is the monthly payroll/jobs data. There is a contrary element to these reports. More weakness will likely be ahead if the market gaps up tomorrow. But there is some decent chance of a rebound if the market gaps down.

The chart above shows boxes around the June-July and the current corrections which are on a log scale. One thing I always say is to look for a larger and faster correction than any prior counter trend move. These often start new trends. By this measure, a move below 1045 in the next trading week will create such a situation. Also when considering that volatility (VIX) was 50% lower on the start of this decline than the June-July decline, such a decline would be very significant.

Also, I still am suggesting that the market may move back down to the June high/July low region in the next month or two.

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The action in gold today appears to me to confirm a new leg down in gold, which does not support the idea that there may be another major inflationary leg up, at least not beginning real soon. However, on a breakdown move like this prices should typically not close back above the breakdown point if the decline is to continue. This is all the more important as it is now oversold on the daily oscillators.