Morning Thoughts

Stocks set to Fall ahead of  the start of Fall.

Stocks were set to start the week with a strong showing yesterday, only to see big gains evaporate later in the day.  The market turned red before a massive buying spree sent indices ripping higher into the close.  Stock futures continued to rally after the bell.   If this was April and not September, perhaps stocks would be higher this morning as well.  As it turns out, the sellers awoke early this morning to join the Europeans in this market rout.

That selling has continued this morning, and with a mere 30 minutes to the opening bell stocks are set to open almost 2% lower.  The bullish buying frenzy of yesterday has morphed into a terrible Tuesday selling spree.  This two faced market continues to astound.  As I've been saying since the market crash many Monday's ago, I think prices are coming back down to those crash levels.  It's taken some time, but you can see the action getting increasingly bearish.

Prices are breaking lower out of the multi-week flagging formation.

The leader to the downside yesterday, in spite of early strength every where else, was Biotech.  The excuse was a Hilary Clinton tweet, but from a chart perspective the writing was on the wall last week.

The Biotech Boogie

and the action yesterday ($IBB is $334 here pre-mkt)


Biotech is following in the footsteps of commodities, precious metals, crude oil and Energy.  We saw it earlier this year, as the market was staying aloft with less and less help from the smaller companies.  As more sectors start to roll over, this ultimately will bring the entire market lower.  I think that is what we are starting to see here.  Selling.  And when it finally reaches those leaders who have been holding this market up, the rate of decline for the market will increase.

With all the wild swings we've seen the last few weeks, one constant has remained... and that is - each of the rips, bounces, recoveries to the upside has been met with selling.... with the most apparent example being last weeks FED meeting.  The rip to $SPY $202.50 was met with swift and steady selling pressure.  Today that selling pressure has accelerated, trendlines are broken, support lost, and maybe most importantly... confidence shaken.




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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