Tuesday was weaker than I anticipated. That was okay, because I still have the NIKE short on, and nothing else looked worth doing. The big stocks AMZN, AAPL, AMD, MSFT, TSLA, GOOG still look okay. I expect those are going to try and rally and likely temporarily save the market once again. That is certainly the most probable scenario. However the least probable scenario —that we don’t get a pop higher —- is fraught with big time danger for the stock market. The very orderly decline so far has seen buyers stepping in to cover shorts or nibble at longs and stem the selling and keep it very orderly. However none of the buyers are willing to step up at higher prices. If that continues we are at real risk to see a sudden acceleration to the downside. What looks oversold now, can become way, way, way more oversold in a hurry. I emphasize again, that I think that is the least likely scenario, but it’s one that keeps me away from the long side here. The China news isn’t helping either, with very weak economic data and slashing interest rates. Additionally the bank stocks are starting to look very questionable, and hard to get a good rally going without those stocks. Citi looks like a good short sale on any bounce so will be monitoring that name. The Fed is Wednesday afternoon. If this market gets a bearish catalyst there or elsewhere, don’t stand in front.
The NKE short is starting to move nicely in my favor. On the attached chart you can see the breakout from the narrow Bollinger Band channel. Take special note that when this stock starts to “ride the rails” of the bands in one direction, volatility can really accelerate it. I have been looking for a move under 104. This could play nicely with the market accelerating down, though NKE has shown it doesn’t really care what the SPX is doing. Still on an acceleration it would very likely get in sync.