Everyone is looking for the biggest factor why we are down this morning. There are many “contributing factors” that have added up in the last few weeks. Obviously this weekend there was the “election news” and some signs of more slowing in Europe and China.
To me the “Technical Info” has been adding up, and is too much for the markets to handle. It’s now been almost a month since IBD put the Big picture in“Market Correction”. Since then the action has confirmed it. Leaders have been technically breaking down and some decent earnings reports have been “Sold”! Everyone had more than enough time and warning signals, to maneuver their Portfolio’s/Trading accounts to handle the composure change on any “time frame”!
$SPX– is opening below the 1365-1370area that was important to set the“Ascending Channel” discussed at length in “off the charts” in Motion.
I will see if they try and re-test that area in the first 30 minutes** but markets don’t have to. (That zone is the Major Short term Pivot for direction)
We also discussed the potential of a Head and Shoulders top in the SPX as the right shoulder was forming.. We will need to measure how the markets handle the“Neckline” to see how much more downside we get in coming sessions/weeks.
1357 is the Reactionary low from Tuesday the April 10th. Perhaps we test this area early on! The Neckline is actually on an angle so it’s a zone. Usually we bounce there the first time. 1340 is the area that most have spoken about recently. A close below 1340-1357- would trigger pattern that I will talk about more later.
At this point it’s late to just start selling your positions on the open. You’re a little late. But might not be the time to buy. Make sure to know your time frame.
On a day like this you look to see if anything can go green and provide some leadership to take us off the morning lows.
AAPL– will be good to watch. This stock has been a trading Animal recently ** two weeks ago showing weakness around $620-622 and now it’s almost 50 points lower. Today, see how it handles it’s 50day moving average. I would not look to short it today, even if it goes lower. But if you try buying it, use a plan. This will be my focus today. Sometimes the 50day holds (569ish) but sometimes they crack it thru in order to trigger a ton of stops- then it bounces. So I will have a ton of plans today and wait for the market to confirm one. Tune into my radio- 9:30-11:00 it’s the best way to follow.
**If 50day gets cracked** next big level is $552-$556
Financials also helped to give clues of weakness. Most decent reports were “sold” on the news!
GS– was sold and we talked about more downside below $114.50 area. It triggered last Thursday..
JPM– was also sold on decent earnings- $43 area has been important and it closed below it Friday.
BAC– was also at 9.40 on the earnings news and is now near $8 zone. (you saw the trend a few days before to sell that on the news)
All stocks usually get hit during corrections- especially if they go deeper.. So we talked about high and lower level stops- to preserve capital and limit loses. Remember- if you’re not seeing it. Cash is a position as well….
Disclosure: Scott Redler is SHORT SPY (Tier#2).