Something for the Bulls and the Bears

We're a little bit in no man's land right now.

Technical Edge — 

• NYSE Breadth: 78% Downside Volume

• Advance/Decline: 68.5% Decline

• VIX: ~$33.25

(There are a few individual stock setups under the Go-To Watchlist section). 

Game Plan: S&P, Nasdaq, Bonds

The market does not have to bottom on capitulation, but these moves tend to end in one of two ways: Through time or through price. 

Time takes investors’ patience and price takes investors’ money. 

However, it’s my view that if we could just get a couple of capitulation-like days to the downside, we could put in an intermediate-term low to trade against and again find opportunity on the long side. The way things are going now — in a painful, drawn out manner — just keeps the downtrend intact.

Bonds rallying and the dollar under a little pressure today may give some relief to stocks. The looming PPI and CPI data likely has investors on edge, though. 

S&P 500 — ES 

Not deep enough in the hole to buy and certainly not up enough to sell, as the ES is now down in four straight sessions but finding some buyers in that 3570 to 3600 area. 

Go tactically from here. 

Back above yesterday’s low is a start for the bulls, but they need to reclaim the June low near 3639. Above that and Monday’s high is in play at 3667.50. Above that could get us to ~3700 and the 10-day ema (to set up for a possible short). 

On the downside, a move back below yesterday’s low of 3600 puts the Globex low in play at 3584, followed by last week’s low of 3571. 

I know that sounds like a lot, but simply go level to level, see if price accepts or rejects the ES in those areas, and keep an eye on bonds and the dollar.  

SPY