Monday Recap

Stocks are off to another rocky start this week, although in the face of China's stock market collapse overnight, I'd say the carnage was not as bad as it could have been.

Since the record highs of just six trading sessions ago, the market has been trading like it has an anvil tied around it's ankle.  The bid has been under constant pressure.

When will the bleeding stop?  

First.  Today's market scan.

Today's Market Scan

also stay tuned later this evening for the unusual option action recap.

The $SPY hung tough today, and actually tried to rally out of the gate, before the seller's took over.  A brief squeeze at the end of the session closed the $SPY off the lows (OTL):

The S&P500 is on the verge of round tripping the China and Greek lows (I have dubbed the joint fear mongering #CHEEK).

Where doth support rest?  OR does it lie this time around?

For the finality of this pull back I think the #CHEEK lows provide significant support.  Also consider 2015 in a nut shell has been one, big, giant consolidation fest, which I think will ultimately lead to more record high price prints.

While the scary headlines triple in number in the face of these pull backs,  historically they have been tremendous buying opportunities... but you knew that didn't you.

But this time is different right?  It's always different.  Until this market stops making new record highs and diverts significantly from the upward trend line its been climbing since the lows of March 2009,  the odds remain skewed toward a sharp bounce and a move to new record prices.

When will the bounce come?

Small caps will need to hold that $120 support level.

The VIX will need to remain below the breakout levels of prior pull backs.

A bounce in some of the bigger names such as $AAPL and $IBM would help heal some of the recent wounds.

and China has to stop the bleeding.   Let's see if China can arrest this market collapse.  Another 8%+ drop will not bolster sentiment, at least not the short term.   I think the question tonight is where is the stepping point for the move back up to fresh record highs?  Is it right here?  Or is it at prior #CHEEK lows?

A few more charts -

$TLT gave the kiss today

$QQQ is stuck in the middle.

and earnings season continues this week.  Here is a quick rundown on $FB and $TWTR

and finally, if you can picture this possible inverted head and shoulders.  This would imply the bleeding stops right here, right now -

Stay tuned for tonight's unusual option action recap.

Have a great evening.


Known to most as Uranium Pinto Beans, Jason has more than 15 years under his belt of trading stocks, options and currencies. His expertise primarily lies in chart analysis, and he has a strong eye for undervalued stock. Because he’s got the ability to identify great risk/reward trades he usually enjoys taking the path less traveled and reaping the benefits from the adventure.

He is a co-founder of Option Millionaires, and he is best known for his weekly webinars with Scott, as well as his high level training webinars and charts found in the forums.

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