E-mini Executors: The market has been unraveling...

The market has been unraveling. Ever since the S&P crossed back below their 150 day smooth moving average the market has been in a downward spiral. The bears are back in control of this trade. The S&P, Dow, Nasdaq, and Transports are all trading below their major moving averages and in negative territory for the year. All of the Indices are also trading in the middle of this summers’ range which puts the bottom of that range in play (the lows of the year). As long as the markets remain in this summer’s range I think that the lows of the year are in play.

I talk about this all of the time; when the news and the technicals collide we have a battle….when the news and the technicals coincide we have the biggest moves. Europe has obviously weighed on the U.S. markets. Where the U.S. markets are priced right now “technically” gives the bears complete control of this trade. Right now the market tells me that we could be in store for a big move lower due to the negative headlines and the breakdown in technicals. If the news starts to get better and we see a rally; the key will be if we can crossover the major moving averages and sustain trade above them. In the past six months we have not seen that happen and until it does I think that all of the rallies will be met by big sellers.

This week will be a very interesting week for the market. If the market rallies then I think that we could see some bulls step in and try to give the market a little push higher possibly trying to retest some major moving averages (which I think will be met with strong sellers). If we continue to selloff then I think that we could see some panic selling come in and we may have another bad week for stocks. The bears have all of the momentum with the headlines and technicals going their way. That means I will be more aggressive selling rallies (barring any good news from Europe) and very nimble when buying breaks. Have a great week!

Moving Averages; Black (10 day), Blue (20 day), Green (50 day), Pink (200 day) Purple (150 day smooth avg.). Horizontal Lines; Blue (High of the year), Red (Low of the year), Green (Unchanged for the year, Black (last summers range), Light Blue (Old highs that could be tested)