For the Dow, we have a 5 1/2 percent correction from the record high posted one month ago at 17,279. Note the 8-month trend line again I have highlighted. That intersection point today is 16564. That level offers a decision point for both bears and bulls. Is there another 4 1/2 percent to the down side? If you think so, the only way to play it is to sell rallies, or buy the 15,500 puts. The S&P futures took out the August low by 2 points, and then buonced. That low of 1880.50 is a fresh 5-month low. 2014 was the all time high posted a month ago on 9/19/2014. That’s a 134 handle haircut, or 6.6% correction. Again, from my perspective, this is looking like the February sell off. Recall then that a lot of “experts” were on the cable shows predicting more weeping and gnashing of teeth. Who knows, maybe this time they are right and its the beginning of a replay of 2010 where we dropped from 14,300 down to 6500. 7800 points or 54%….. If I knew that, I wouldn’t be typing this at 8:59 in the AM. Also there’s the old axiom, “even a broken clock is right twice a day”. From a trading perspective, when the markets are volatile, it gives you chances to catch decent day trade moves, but you have to be on top of it and you have to be very disciplined. You also have to have the courage to fade big moves. That’s difficult for most people’s emotions.
There is a 1 year old trend line in the December S&P futures: Comes in to play at 1901. Again, that trendline gives you good targets for entry/exits. No one admits they look at them, but the market action suggests that is nonsense. Please email me or call me on my toll free 866.924.0486 if you’d like to become a client and look to profit from my technical indicators. CER