Russia Rolls In, Stocks Roll Over
Russia Rolls In, Stocks Roll Over
Looking at the S&P 500 and gold.
Technical Edge
NYSE Breadth: 73% Downside Volume
NASDAQ Breadth: 78% Downside Volume
Just two days ago, we discussed the possibility of a sub-4000 trade on the S&P. Specifically, the discussion centered around being in an “ABC” correction and failing to hold the January low near 4212 could “put the 3,980 area in play.”
With this morning’s selloff, we’re about 125 handles away from that level in the ES futures, or only about 3%.
Unfortunately, this is the type of action that’s needed to eventually get to a bottom. We need the VIX to rip — which it is, trading $37 or so as of this morning — a larger dip in equities and for god’s sake, we need some panic in the market.
Yesterday’s downside breadth didn’t crack 80% and sentiment is remaining stubbornly elevated. We’re finally starting to see some fear now with yesterday’s action. Today’s open should add to it.
Game Plan
I hate saying stuff like that because I’m a natural-born bull and an optimist, but it’s just reality and as traders, reality is all that really matters. Embrace reality, don’t hide from it. Because the market won’t care what you do and if you hide, it will only hurt yourself.
As traders, we need to know when to shift gears and when and refocus on different parts of the market. While we’ve talked about the possibility of retesting the Q4 lows — and we’re now below them this morning — I do wish I turned bearish earlier.
That said, we have at least navigated the indices pretty well these first few months of the year.
S&P 500 — ES
Feel free to extrapolate this layout to the SPY.
