The Biggest Downside Breadth I've Ever Seen

Navigating a "meltdown."

Technical Edge — 

• NYSE Breadth: 98.4% Downside Volume (!!!)

• NASDAQ Breadth: 86%% Downside Volume (!)

• VIX: ~$33.50

Monday marked our third straight session of 89%+ downside volume. Yesterday’s reading of 98.4% downside vol is the highest I can recall on a closing basis. At one point during the day, we cracked the 99%+ threshold. I have never seen that before, so how the market handles from here will be quite interesting. 

Game Plan — S&P 500 (ES and SPY), Nasdaq, Bitcoin, AR

The market looks like it is discounting the FOMC meeting on Wednesday, as it continues to sell off amid increasing speculation that the Fed hikes 75 bps instead of 50 bps. 

I don’t like that we’re gapping up coming into the day. If that’s the case, I think we will give up all of those gap-up gains and retest yesterday’s closing prints at the minimum and retesting the lows would not be surprising at all. 

We are lacking in individual setups, but the environment is horrendous. The VIX is $33+ and the market is melting down. The best play right now is capital preservation and nimble trading on the indices with small position sizing. If the action is too hectic, there is zero shame in sitting this stuff out for the time being and taking it one session at a time. 

S&P 500 — ES

I want to look at the bigger picture here with the S&P. Yesterday was simple, right? Hold 3800 or face lower prices. It was the latter and we got the flush down to the 3750 area. 

With the Fed meeting on the books for Wednesday,