We had everything answered today that we couldn't answer at the end of our last Journal. Where was the correlation between the indices closes from Friday?. Despite, the DJIA/ SPZ taking the brunt of losses after the jobs report, the NDX, the RUT finished with very little loss. It hardly made sense considering the terrible news and being in such a vulnerable technical place in regards to a potential breakdown. Something was amiss and today was the missing link from Friday as the NASD-NDX and RUT played catch up in a big way. The big losers -1.95 -2.0 -2.45%, respectively amongst the indices. In the past, we have discussed the probability of 'momo dominos' and today anything that resembles momentum plays from the past months burned twice as fast anything out there.
Considering the trading stance we've taken here of late, this is one time where the hurt should have been minimal, if at all. Instead of being creamed with the lot, we are now looking at the possibility of a bounce where we could trade these in tow as we sit around SPX 1270. Tuesday looks conveniently set up to trade some of these beaten ups. While the market grinds down ..DJIA down 7 of 8 days, RUT/NASD/NDX closing below intraday lows from Jan swoon, our trading stance which first is capital preservation should allow to capitalize on any reversal, short or longer term and in the meantime avoid losses like those seen today in this overall rough trading environment.
If something fresh doesn't sour the market more, a bounce of some sorts should be coming tomorrow as we are at some important ( yep..again.) FIB technical levels on the SPX. We might even look at some of the firms like BSC, LEH for a trade.