The markets are trying to stage the early morning rebound following a very negative open. Although, I don't agree with some of the 'the world is ending scenarios' every bone in my body tells me that we will see the rally fade into the close. I hope I am wrong and everything will be rosy from here, but the technicals are plain ugly and the buyers are still scarce. The activity seems to be again concentrated among some nervous shorts covering, options expiration position squaring and high freq guys doing what they normally do - trading the daily trend.
I have been spending some more time with charts, since fundamentals don't seem to matter now. The 1150 was a very negative break with multiple long term trendlines broken. Everyone seems to be talking about revisiting the 1050, so it becomes a self fulfilling prophecy.
The short term trade seems is to buy 1050 for a bounce..but sell 1075-1085 resistance. The intermediate technical picture is still pointing to more pain. The possibility of revisiting 1010 is now real scenario in my book. This is where I would start putting money to work. If we break 1000, the 933-950 support comes into play and I would be there with really big shopping bag and its my 'back up the truck' level.
Of course, the Dow 10,000 is psychologically important as well.
For now this crazy volatility has relegated us to small trades to capture a few points here and there...and keeping a few longs in the portfolio that have already gotten beaten to a pulp and probably too late to sell now. With plenty of cash and some VXX to offset these losses, I can think constructively and get caught up in the emotion of the day
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