2:25 pm ET: Eurozone woes continue to rock our market. Today, Spain went hat-in-hand to the EU requesting more funds to bail out its banks. This action sent European markets plunging which in turn caused ours to tank on the open, sending the VIX back over 20 (the bull/bear dividing line). The good news is that the major averages seem to be rallying off their earlier lows. The rapid rise in the Trin (Arms Index) reflects the overall bearish tone but it's now entering contrarian territory (around 2.0) which typically indicates a bullish reversal.
But this doesn't mean that an ensuing rally, if any, will be long-term. In this fragile geopolitical environment, it's impossible to predict market direction with any degree of accuracy. The only thing that possibly can be predicted is that the market will continue to be volatile, at least until the Euro debt crisis is resolved. Until then, long-term investors should be sitting on the sidelines or cherry-picking at most; swing traders can play the market on both sides but I'd recommend taking smaller position sizes and sticking to stop-losses (which I'm sure everyone does anyway).
Trade of the Day: Bearish on oil services Oil and gas related stocks have been taking a beating along with the plunge in commodity prices. Getting battered the most today are the drillers and servicers whose ETFs (XES, PXJ, OIH) have only just today broken support levels. Regarding individual stocks in this industry group, the following issues are hitting new lows: PDS, GLF, KEG, UNT, BAS, PTEN, HAL. All of these stocks have options with the last three having the most liquid playing fields. Options traders may wish to consider buying puts or put spreads; stock traders who are seasoned short-sellers may wish to take a short position in one of these. Judging by the recent ETF lows, I'm estimating there's at least 5 - 10% further downside to be had.