Early this week the bulls had a chance and fumbled the ball. The bears had their go at it today and did exactly what they needed to do; driving the SPX down over 70 points. That was twice as bad or more to what I anticipated. My thought was the bears would also fumble and lead to a sloppy range trade for a while. I am adjusting my outlook based on the new information to a much more bearish stance. I don’t think the market will be able to retrace much of Thursday’s losses. So any bounce attempt comes only after still more selling and lower levels, or we get an anemic attempt at a bounce from here. As all but the most new traders know, picking the top is a fool’s errand. But recognizing that the market has provided different information is critical. And I think that is where we are now. Important factor is not to expect much of Thursday’s range to be retraced so any retrace back into it is a sell. And expect lower prices to follow.
If the market attempts any sort of rally Friday, look to go short. I don’t think it can sustain anything but a bit of short covering that will evaporate quickly. The attached chart shows the “Guppy Moving Averages”, a simple concept that quick Google or YouTube will explain. Bottom line the bulls are no longer in charge.
The banks don’t look great. C looks like it has further downside and a good put option candidate. Some other stocks that I liked have failed and that failure makes them candidates for the short side as well. I would put ARKK and SBUX and SHOP in that category.