Market did a very nice drop on Tuesday which I expected and closed below SPX 1320 - but we still need more downside and a drop below 1300 could confirm a bigger move down.
The question remains seen if we drop down to 1300-1307 or so and hold there , then there is a good possibility that we might see new highs above 1344+ , so I am watching this level closely - but I dont think markets did bottom yesterday , as I think we will see below 1310 and near 1300-1307 area support first.
The VXX also looks very bullish to me - and therefore I think VXX will breakout today or very soon - and with that I expect markets to drop more.
Another thing is that there were some BIG open interest in the dollar UUP yesterday and the FXE Euro touched the long term trendline which is drawed and got rejected from there. So the euro looks like a major top is in and a dollar bottom should be in with a reversal bar on daily chart. Someone is betting big on a dollar rally near term - who ? I dont know ... but lets see near term
So there are many things which leans me to be more bearish now with a very bullish VXX and very bullish dollar short term here and therefore holding shorts from 1333-1330.
If you look at the small caps they have been plunging down a lot more and TZA has been moving up 10-15% last days - very big move imho which I alerted days ago with charts.
All in all - holding my shorts and looking for more fear to move into markets as the VIX and VXX have not spiked up above 20 - when we see above 20 near term imho , we should see some more selling pressure in markets.
The question remains - do we hold above 1300 , making a inverse HS pattern which is very bullish and then move to new highs ? Or do we break BELOW 1300 - and then I think good possibility of seeing below 1250 ?
Time will tell near term, but until now the trend is down and remains down with the MACD getting more bearish. Watch out for the MACD histogram in small caps to change from down to up , and then maybe play a bounce in small caps as they have been hit hardest.
Have a nice day
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