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Halftime Report, October 26: Bear Flag

|Includes: SPDR S&P 500 Trust ETF (SPY)

Sorry for not providing any analysis on Friday or this weekend. I was in Albany, NY for a racquetball tournament. I have not made any trades since the middle of last week, and I am waiting for a convincing move in the markets. It looks like that conviction may come today.

The markets are currently selling off. This move can be attributed to strength in the dollar (DXY). The TICK, TRIN, and VIX are all reading bearish right now. The VIX is up roughly 8.5% today and is above 24. These readings on the market internal indicators are corroborating the sell off nicely. Intraday the SPY has made a bear flag formation. These usually resolve to the downside.

On the SPY daily chart the high base formation I have been talking about is breaking down. Recently, high bases have been braking down, so this is not too surprising, but it would have been irresponsible to expect a breakdown out of a high base and play the markets in anticipation of one. We have a lower high and a lower low on today's candle, so a we could see the start of a down-leg here.

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Trade Smart Everybody,
Jason