From our newsletter this weekend:
It really all started to fall apart after we broke the big 2009 trend-line that we have been talking about for months. Our motto was, as long as we hold the trend-line, bias is long. Once we break it, then re-assess. If you haven’t already please read our post http://highchartpatterns.net/technicals-meet-fundamentals-again/.
We expect some sort of oversold bounce but after that most likely the most frequent set-ups will be a) resistance shorts and b) breakdown shorts. If the market starts to heal itself (which occurs when bounces are not automatically sold) then long set-ups will appear in our scans.
Next significant support levels for the $SPY are 115.2 and 113.2 but the technical case for the bull market — which we have always framed against the 2009 trend-line– was over on last Monday’s break of $127.5.
For the shorter time-frame Sunday night futures $ES_F are holding the Friday lows — no panic yet, just a give back of the last few hours of the Friday afternoon rally.
That’s the first short-term line in the sand for tomorrow.
It feels like we’re lurching from crisis to crisis these days — prepare for some crazy times. Our game plan is to go for consistency, playing defense, hitting singles, and not looking to become heroes.