Swing High

The markets are stalling out here after a significant 3 day slide. In fact, last week we saw the biggest 3 day slide in about 10 months! Naturally, the markets need a breather. SPY is hovering around support at 110, but closed under it today, which is bearish. The market internals showed some divergences, but that is expected on a sideways day. On the daily chart of SPY I expect to see some consolidation at these levels, whether it is a low base or a bearish pennant formation. After which, I expect continuation to the down side. More confirmation is needed to call this a reversal for the broader market indexes. In fact, I probably will not be comfortable calling a change in the trend for another month or two.

I spent most of the day adding to bearish positions as well as tightening stops on my long positions. This is just a precautionary measure as I expect more downside. When the trend is confirmed as bearish, I will probably short the market with a basket of inverse ETFs.

Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately.

Happy Trading,

Jason

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The broad market is breaking down hard today. We are seeing incredible deterioration in stocks with confirmation from volume and breadth. The TRIN is pretty much a breadth indicator, meaning that it measures volume flowing into stocks on the rise and compares it to volume flowing into stocks on the decline. The TRIN is looking very bearish today. The TICK has been negative almost all day. The VIX is skyrocketing, up 10%+ so far for the session.

SPY cut through some crucial support at 110. If the markets can hold these low levels, expect a down leg to start here. One thing I forgot to mention is that the dollar is showing strength today, which fits with the inverse correlation theory we have seen for most of this year.

I added to my short positions when the markets shattered support this morning. I will hold them for the down leg if it happens. Otherwise, I will lighten up on my shorts if SPY breaks back above 110. Thanks for being a part of Swing-High.com! Always trade with a stop loss and manage your risk appropriately.

Happy Trading,

Jason

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