The trading last week was done on low volume, both on the way up and on the way down. It was disturbing to see a strong selloff on a bad nonfarm payrolls number without much volume. The evidence that you have cleared out the weak hands is a lot of volume on a volatile day. Maybe we will get that today, but I wouldn't step in to buy until we see it.
On this downleg, I don't see us going down to 1100. We need to trade a bit longer in a range before breaking down, because like me, a lot of people are bearish on this market. Hope needs to rebuilt a bit at the least. When all the news is behind us this week, a relief rally could go back up to as high as 1210. From there, I would look for that next down move to test 1100 and likely break it. I am looking at the most likely scenario, but we can take the path lower in a different way. So playing a relief rally is dangerous since we could go straight down.
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Given the Eurostoxx 50 and DAX have made fresh lows I suspect the S&P will actually go to lows first before above 1200 especially now we are seeing some USD strength even versus the Euro despite the SNB intervention, I think sell futures here makes sense even if you are not short already. US very expensive now versus Asia and Europe
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