Here we are. At the door step of the correction we have been expecting and waiting for. SPX is near many technical indicators and support levels. VIX is knocking at the door of the 20 dma. If the SPX can fall to 875 or lower, and the VIX break through that elusive 20 dma, we are headed for a fall to the 820 or lower area.
But every time we have come to this place, the market has rebounded. So until it happens, I am not convinced we are going lower. How many times can the market bounce off of this? Lets see over the next couple of days. I suspect we fall through tomorrow based on housing, unemployment data and treasury auctions. I think the house of cards is about to fall and it will fall first in financials.
If support holds, financials will rebound hard so that is why financials are so risky here. Better stay nimble but I would not set stops very close because it will be quite a battle and stops will be knocked out too soon.