Nearing Some Key Downside Targets

Watching SPX and Bonds today.

Technical Edge — 

• NYSE Breadth: 68% Downside Volume

• NASDAQ Breadth: 81% Downside Volume

• VIX: ~$34

Two things surprised me yesterday: NYSE downside breadth was sub-70% and the VIX actually fell 1.3% in a session where the S&P 500 and Nasdaq fell 1.5% and 3.2%, respectively. 

Bulls actually had a pretty good setup for them yesterday, provided they could gain any upside momentum. There was a clear two-day low in many stocks and indices and if the market responded well to the CPI report, there was room to fly. 

The market tried early in the day to rally, but it was met with sellers at the pre-CPI high in the NQ and ES markets. Once that was resistance, sellers felt comfortable flushing the market lower. 

Game Plan — S&P, Nasdaq, Bitcoin, Individual Stocks

A gap-down today is better than a gap-up. Bonds continue to power higher and just as it did yesterday, that has my attention. 

Today is light → I basically just want to see the action. Do we get some sort of capitulation? Do we gap down and reverse higher? There is finally some fear in the market and it will be key to see how it responds.  

S&P 500

Circled above is the two-day low that failed on Wednesday. In Globex, the ES is trading into my downside target, the 161.8% extension from “D” leg to “C” leg at ~3900. 

We’re seeing “the generals” start to crack — names like AAPL, TSLA, etc. — and it’s probably indicative of margin calls and cash-raising attempts. 

If the market can hold this area and bounce, the ES needs to reclaim…