It was a wild 12+ hours of action filled with nasty declines and one massive multi-hour rally. When it all came to an end, prices found themselves at or near session lows. Support was broken, or hanging on by a thread, and financial stocks added another day to their record losing streak.
The support levels I have been watching ( I covered Monday) either broke today or hanging on by a thread.
$SPY = hanging on by a thread. We are back at channel support:
I see many using March as a road map for the recent price action, implying a lot more downside lies ahead.
Benjo was kind enough to share this in the om room after the closing bell today.
Let's see support break, it hasnt yet, and going back to Monday this area acted as a spring board. Clearly our line in the sand is 2700 for S&P500 futures. Absent a break of that figure we could be looking at a double bottom of sorts. Futures came within a point of Mondays lows into the closing bell today.
Now lets head over to the support break zone......
$IWM is breaking down. It busted through support today and we now have to look at the next big support at $160.
$QQQ broke though that KEY $170 level. It took us weeks to finally break through it to the upside, It only took two tries to get back under it.
We had some nasty reversals across the board. $NFLX was looking rosy this morning, with another big price target stamp from an analyst, and then boom.... $21 of downside. It's not at $340 yet, but clearly turbulence is picking up.
Fnancials also had an ugly reversal. Financials have been falling on a regular basis and are now in the midst of their worst losing streak EVER. Yes not even the financial crisis had prices falling with this regularity.
$XLF:
Financials will turn around sharply at some point, but when? They looked ready to do just that early today, with some of the financials up over 1% early. They gave it back and then some.
Finally....
With prices falling back to Mondays levels, and in some cases even further than that, the VIX was unable to muster a higher reading. Either participants are already ready for the looming decline, or that decline is not coming.
So let's cut to the chase. Is the downside we saw today going to continue, with prices heading back down to the 200 day moving average?
Clearly today's reversal was alarming. Financials still selling off... that's alarming as well. Stocks falling after a sharp move higher the first hour of trade??? That's alarming too.... throughout the last 8+ years of relentless upside, the first hour of trade was used to pull prices lower before the dip buyers took over and sent the action up, up, up. To see the upside action stop at that 10:30am area... that's alarming.
Countless session lows have been made an hour in, we don't see the highs come at that time very often, as was the case today. So to answer the question... yes. I think the odds are now stacked in the favor of more downside. However....
I'll be watching the key 2700 level on the S&P500, the VIX, and the early buying/selling for confirmation.
From there a break of support sets up a date with that 200 DMA at $264.
