A quick update here. The S&P got thumped last night post Ben's announcement and certainly the sell off looks strong with decent breath. Ulitmalty the market sold off at the top end of the range and I missed it. There was a potential warning sign with the S&P short term 1220 Double Top pattern and the Nasdaq bearish reversal out of the 200SMA on the Daily. A trading friend of mine at, http://marketletters.blogspot.com/ highlighted the underlying breadth weaknesses coming into that 1200 level and this has played out. I reduced the book somewhat into the announcement. However, where does this leave us now?
I called for an Intermeadiate corrective choppy rally up to 1250. These kind of moves, just like in 08, are overlapping and choppy and never move in a straight line. I still think this could possibly play out as long as the market can hold the 1160 level on a cash basis. The ultimate line in the sand is obviously the 1140 pivot and bears should look for breaks of this for confirmation of a new leg lower.
There are a few charts that give me small encouragement. Firstly, the DAX has been the leader since putting in its climatic bottoming pattern. The rally off the low looks impulsive to me and this could possibly be a natural retracement into good supports. I am looking for this level to hold.
DAX Futures 15mins:
Back into the low end of the range and potential support. 1140 is the line in the sand.