Everything we wrote on Monday in our “It is what it is” post still applies to today. The trend-line is broken, and bulls have to accept that. The remaining and last standing support now is the horizontal support which held today:
The last two days we’ve sensed real fear — gold and USD ripping at the same time is often a good indication. Today it was even more palpable as the miners were being blown out while silver and gold futures were green (they reversed later). Market is waiting for some type of intervention from Europe. So what do traders like ourselves do now?
1) We wanted to buy the blood on the last-standing support on $SPY which we did yesterday and today (tweeted entries and exits). That was the last support long on $SPY for a while and we’re done with that trade.
2) If we base around here and build on the 122.5 base with some upward momentum we will find new long set-ups and trade those next week. If we base around here and do not build any type of upward momentum then we will switch to short alerts.
Either way after today there’s not that much to do but wait for direction. So far the bulls are holding but it’s by a thread, and distance away from 122.5 will be needed to build any type of confidence. That being said the first test of the underside of the 2009 trend-line and 200SMA will likely be shorted. Lots of action for a normally quiet and boring August.
No positions, all cash.