Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

The Stock Selloff is Continuing Right On Schedule

Take a look at the chart below and you will see that the fall in equities that I have been pounding the table about for the last three weeks is continuing right according to my script. A series of lower lows have been following lower highs just like clockwork. The current downward channel is targeting my initial target of 1,290.

The madness we saw in the market last week were not exactly an indicator of great health. When Linkedin (LNKD) doubled from its IPO price, it was not an indication of how much they liked the social networking company, but how much they hate everything else. In the meantime, even modest earnings disappointments are punished severely. Look no further than Aeropostale’s (NYSE:ARO) 15% dive.

The trading oriented among you might put in some high limit orders to sell your existing (NYSEARCA:SPY) $130 puts at levels equal to $1,290 in the S&P 500. You might clock some serious gain on your position right around that level. But keep in mind that the flash crash risk for the market is now very high, with so much hot money in the market, hedge funds accounting for 60%-70% of the daily volume, and high frequency traders circling like a school of hungry sharks. Look at the next chart below of stock market capitalization versus GDP, and you can see how far it might fall.

I think at the very least, the “RISK OFF” trade continues until June 30 at the earliest, the day QE2 ends, and early September at the latest. You might be taking a bird in the hand, but missing the flock in the bushes.