Thursday, January 7, 2016

Short Term Oversold

Not a bull by any stretch, but usually when you get a third big gap down in 4 days, usually that is capitulation.  We got capitulation overnight as we got down as much as 53 points on the S&P futures.  I am not expecting this to be THE bottom, where we go straight up, but it will provide a floor for a few trading days.  Beyond that, I expect another selling wave to overwhelm the market and take it to the SPX 1880.

Nibbling buys on ES today.  Anything is possible, but it looks like short term capitulation and odds favor a bounce here.  China is not that important to the US market, and it seems like the fear is getting a bit overdone here.  Still, we've not had enough selloff days for this to be the low of this move.  The selloff still has several more days to go till we hit the absolute bottom.

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