I smell a set-up, similar to the one I felt just before April when I said that the market would not hold any significant downside until there was first a head fake move above resistance which had been becoming more and more defined...
In a similar, but smaller way, the same kind of set-up is occurring right now, except this time with the 150-day SPX moving average.
The VIX which was shown in today's Leading Indicators Continue to Fall Off a Cliff had the biggest 2-day surge since January...
Right now it looks like the Euro is strong and the $USD weak, but I posted this in an update earlier, I believe we are going to see the $USD make a near term bounce and the Euro pullback which should...
Looking specifically at FX futures...
As for how far it may go...
As mentioned earlier, this should help send oil/USO lower on $USD strength and interestingly...
It's hard to add much more to what has already been posted today. Even though I suspect we should see a 1 min decline/intraday in the averages before they can move higher, if they can move higher (I suspect so because I don't think that 150-day moving average support is there for nothing, it looks like a set up to gather stops all in one place), it seems like there's some short term corrective set up with the SPX 150 m.a. as the centerpiece, as I said, to gather stops in one area.
I'll wait for the charts to give evidence rather than guess, there's plenty of time on the VXX calls and they're near a +50% gain.
HYG is in terrible shape, not just leading indicators either, the 3C charts are horrible, if there were positive intraday divergence there I might assume a bit more rather than wait on evidence, but there's not and this market is just a head line away from breaking as Greek Capital controls are already being seriously discussed and the ECB's non-monetary policy meeting Wednesday could yank all the Greek banking sector liquidity (what little is left) and really show you what a bank run and civil unrest look like.
As for internals...
All but the Dow had a Dominant Price/Volume Relationship, it was Close Down/Volume Up, a 1-day oversold condition with 50 NASDAQ 10 stocks, 972 Russell 2000 stocks, 217 S&P 500 stocks, the second place was close down/ volume down.
In this case, this is a 1-day oversold condition and makes sense given the SPX's support at the 150-moving average and "hammer-like" price closing candle, I'd still prefer to wait and see the actual moment with the intraday charts turning down and then going positive on short term charts before making any moves as this is a very weak and dangerous area for the market, it's not an area where I think "Gut feeling" is a good way to conduct analysis.
The number of stocks in each of the majors > than their 50-day is very poor, only 9 Dow, 39 NDX, 972 R2K and 173 SPX.
Of the S&P sectors, only 1 of 9 closed green, again a 1-day oversold breadth condition.
Of the Morningstar groups, only 23 of 238 closed green, AGAIN A MASSIVE 1-DAY OVERSOLD condition. I see no reason the market shouldn't correct from here, but if anyone remembers Lehman, there were plenty of days the market had EVERY reason to correct and some news came out that wasn't discounted and down we went, trying to play counter trend bounce at the start of the bear market was a very dangerous game, thus the reason I want evidence rather than just gut feeling or probabilities.
Should we get the evidence for a bounce or even a corrective bounce off the 150, remember there's a roof on it with the VXX 5 , 10 and 15 min charts....
I might have a very difficult time taking gains (short term) on VXX calls with charts like this looming, it certainly doesn't look good for the market.
As for futures, it's a bit early, but the ES intraday chart doesn't look good here.
I'll check futures later tonight and let you know if there's anything exciting. Otherwise, I think the message of the market should be pretty clear by this point.
Have a great night.
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