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Post Market Analysis, Monday January 25

|Includes: DIA, IWM, QQQ, SPDR S&P 500 Trust ETF (SPY), XLF

 The markets are stalling out here after a significant 3 day slide. In fact, last week we saw the biggest 3 day slide in about 10 months! Naturally, the markets need a breather. SPY is hovering around support at 110, but closed under it today, which is bearish. The market internals showed some divergences, but that is expected on a sideways day. On the daily chart of SPY I expect to see some consolidation at these levels, whether it is a low base or a bearish pennant formation. After which, I expect continuation to the down side. More confirmation is needed to call this a reversal for the broader market indexes. In fact, I probably will not be comfortable calling a change in the trend for another month or two.

I spent most of the day adding to bearish positions as well as tightening stops on my long positions. This is just a precautionary measure as I expect more downside. When the trend is confirmed as bearish, I will probably short the market with a basket of inverse ETFs.


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Happy Trading,