Light Volume Produces A Down Day…

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With only 128 million shares of the SPY traded today you would expect a huge UP day... but it was DOWN!  This is a big change in the market, and could make a big difference in the coming days and weeks.  Apple was down, Goldman Sachs was down, JP Morgan was down, Oil (USO) was down, Gold opened down, and of course the dollar was down too... but recovered later.

The only reason the dollar (UUP) was down... was again due to government manipulation.  Bernanke spoke and the dollar fell... coincidence?  I think not!

bernanke-throwing-money-out-of-a-helicopter

This market is getting ready to fall hard folks!  Stay short!  Tuesday could be another pause day as the dollar tries to break overhead resistance.  Once it does... the market could quickly fall to the 1070 area within a couple of days!

Everything is looking negative right now for the market.  All the leaders... the Financials, Commodities, Gold, and the Technology are all struggling to rise up.  The XLF (banking index) has been falling for several weeks now.  Gold dropped huge on Friday and gaped down today.  It may recover as it isn't viewed like other commodities because people flock too it when fear comes into the market.

But, the leader in technology... Apple, has been falling hard too.  Oil (USO) broke out of the lower trend line in the downward channel it's been in.  If it closes below it tomorrow then it will then be confirmed, and will fall hard to the next support levels.  If oil can't support the S&P500, and the financials can't either... then who will?

Tech can't do it, Gold can't do it... what's left?  NOTHING!  The market is hanging on by a thread, and the "Three Stooges" can only delay it's demise.

the-three-stooges-obama-bernanke-geithner

It's coming down folks!  Again, it might not be tomorrow... but Wednesday through Friday should be ugly!  I just can't see any possible way to hold it up with all your leaders falling.

In the past, when one sector would struggle to make new highs, the other sectors would step up to the plate and rally the market.  We have seen it time and time again.  The financials start to fall and then Exxon would rally, bringing the market up.  Or, technology (like Apple) would rally the market while oil took a breather.

It looks too me like all the big players are tired and ready to take a break.  Simply put... the market is out of steam and ready to fall.  I'm staying short!  End of story...

Red

258 COMMENTS

  1. Nice post Red! I agree with you that a lot of the sectors have been weak for some time now especially financials and tech. Most shorts think this is a bear trap similar to late October but this slow weakness may be what we need to push this tape lower. In late October the markets sold off within a perid of 4-5 days and everyone started jumping on the short side only to burned. The VIX jumped from low 20s to 30s in one day. It's a little different now especiallly with the sideways pattern. I believe mutual funds and institutions are slowly scaling out of their positions these last few weeks. This has been met with some buying from dumb money. Dowards momentum is slowly building. Participation to the upside is waning. The SPX may trade sideways between 1080 and 1110 for the next few weeks but at some point this should accelerate hard and fast (sooner the better). We need to really break below 1100 support first.

    • Agreed…

      It has been dumb money here lately, and yes we need to break the 1100 level. I believe it will come… and come like a thief in the night. If you aren't already short you will miss out, just like they did last week.

      Thanks for stopping by,
      Red

  2. Should have seen this earlier. This afternoon, while worried about spx climbing higher to the level of 1121 (or talk of 1045+ ), I sold off all my shorts (amzn shorts, faz, and etc). Now 100% cash.
    Make all the senses. Seems to support your view, ES just went down.

    • You still should be ok, as we may have another sideways day tomorrow while the dollar tries to break overhead resistance. Once that happens… another short squeeze will occur, and the market will get hammered!

      Red

  3. HI Red
    same as you I have remained short
    and added more yesterday late afternoon
    Elliotters giving the bull the benefit if the doubt, even tho they have pictured both directions, they seem to be more bullish than not
    Jay

    • Looks like we got our start today Jay. I expect more downside over the next few days. I think we are headed to 107.70 spy asap. That's about 1070 spx.

      Once we hit that level… I'm out. I'll go long probably into OPX.

      Red

  4. Leo… I got your reply left on Cobra's web page. Thanks! How are you? Love your morning write up, very good!

    I been at http://trading-to-win.blogspot.com

    Remember Keirsten and DavidDT from Mole's site ES? Now they run a fantastic blog now with a lot of excellent traders from SOH & ES. It is a no drama zone. Lots of good charts and trade ideas. Please come by and pay us a visit and stay. You would be a wonderful addition to the group.

    • Ok, great! Of course I remember Keirsten and DavidDT. But, I thought you knew about Anna's blog… http://www.hotoptionbabe.com?
      I figured you'd be a regular, but maybe you didn't hear about it? (Don't tell anyone, but I was the one behind creating it for her, and help her run it secretly in the background. Of course she does all the posts and maintains it, as I just do the tech stuff. It's become a huge success, as Anna has a lot of followers).

      She beats my daily comments in half an hour! LOL! It's all good, as we are all friends and “who has the most comments” doesn't really matter anyway. I'm sure she would love to have you come by too, and I'll try to stop by your hangout as well.

      Red

      • I did stop by once… and was totally in awe of the site but I thought it was her work. EXCELLENT job Leo…a BIG +1 for you. I will stop by and look for you. 🙂

        • Of course all the posts and comments are “her work”, but I setup the blog for her and created the images, and themes. I'm just the tech guy in the background. Most people don't know it, (but it's really no big deal anyway).

          We are a team, Anna and I, and she tells me her ideas for possible graphics and images, and I go make it happen. All in all though… the site is Her's, and I just helped make it happen, and continue to help out when needed.

          I just thought that she needed her own blog, as she is such a great trader. I followed her, Keirsten, Fuji, you and many others over at ES and SOH.

          So, when Cobra went with the Disqus platform, I was forced to sign up for a disqus account to be able to continue to post on his site (I was posting under my real name, when it was just a generic comment system).

          Anyway, after choosing the name RedDragonLeo, I also decided to put up my own blog at the same time. That way I could post my longer comments on my own site, so I wouldn't just “take up space” on someone else's blog… especially if it was just a bunch of useless bitching about the corruption or something. (You know how easy it can be to get booted off some blogs… just because your opinion isn't the one of the blog owner).

          That's my story… and I'm sticking too it! LOL

          Red

      • (Don't tell anyone, but I was the one behind creating it for her, and help her run it secretly in the background. Of course she does all the posts and maintains it, as I just do the tech stuff.

        Oh-ho – blackmail time!!!

        Great blog Leo (and thank you for helping Anna 🙂

        • Well, I guess there are a few people that know I'm behind it, as I've come out and spoke about it more lately. I thought I could just build it and let her do her thing, but I like creating new themes and adding things onto it.

          She does too, so I'm more active then I thought I would be… but it's fun, as I enjoy it.

          As for your “too bad I am getting headache from unproductive noise”, that's just part of having an active blog. You should be glad you got the traffic, even if people sometimes just chat with each other. After all, it's not just about making money… it's also about having fun and creating new friends.

          I'm sure you were just joking though…

          Red

  5. (Don't tell anyone, but I was the one behind creating it for her, and help her run it secretly in the background. Of course she does all the posts and maintains it, as I just do the tech stuff.

    Oh-ho – blackmail time!!!

    Great blog Leo (and thank you for helping Anna 🙂

    too bad I am getting headache from unproductive noise 🙂

  6. Well, I guess there are a few people that know I'm behind it, as I've come out and spoke about it more lately. I thought I could just build it and let her do her thing, but I like creating new themes and adding things onto it.

    She does too, so I'm more active then I thought I would be… but it's fun, as I enjoy it.

    As for your “too bad I am getting headache from unproductive noise”, that's just part of having an active blog. You should be glad you got the traffic, even if people sometimes just chat with each other. After all, it's not just about making money… it's also about having fun and creating new friends.

    I'm sure you were just joking though…

    Red

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