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Yesterday’s battle left much blood on the streets and it is exactly because of days like  yesterday that we a) trade/invest in multiple time-frames and b) are open to entirely change our outlook each and every day if need be.  Less flexible, stubborn…heck I’ll just say it, academically snooty folks don’t play this way because their ‘models’ and ego tells them when ‘stuff’ can’t rise or fall any more than it already did.  Right…, and then there are the margin calls, which as usual yesterday hit at 3:30PM ET and took the a market that was already down four percent down another 100 basis points at its worst levels. 

The market is like a constantly moving target, which is difficult enough but the factor left out by most analysts is that we ourselves are moving too.  Picture yourself standing on a  moving platform having to jump to another moving platform.  The moving platform you are standing on is your interpretation of what the market is currently doing.  The trick is to balance your platform as much as possible so that it doesn’t move significantly.  We must be open to all possibilities in the market at all times and if we constantly change our ‘bias’ and let emotions creep into our analysis it makes your platform move that much more, i.e. makes it more difficult to hit your target.  

Now that the S&P500 has sold off almost 11% in nine trading sessions, where do we stand and what do we do?  I pointed out this weekly chart of the SPX last night because it serves as a key big picture map to the path we want to take.  We have revised own our ‘relief rally’ target (if and when) from 1340 down to now more like 1250-1275 over the past week or so.  That’s the moving target part.  In terms of the platform we stand on (our interpretation), we could now easily either day that stocks are undervalued and must be bought blindly or sell everything in sight, buy a chicken and a cow and learn how to knit.  But neither stands will do us much good because we and no one else for that matter knows where we are heading next.

Let’s look at some charts to put everything in perspective and allow us to remain neutral and let the market lead the dance for us.

On the weekly chart the S&P 500 has broken the major uptrend in place since the 2009 lows.  That’s significant, that’s telling, that is what it is, period.   No bias here, but should we rally some in the coming days/weeks we would be better sellers again at the very latest around the 1300 mark. 

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