Dow was down 390 on Friday marking the first trading session since late June to move more than 1%. We have been in such a tight trading range for the past 2 1/2 months that something needed to give. It just happened to give down. That’s OK as we have been hedged a bit with short positions.
S&P 500 Index ETF (SPY) daily
You can see from the daily SPY chart that price closed under support, the red horizontal line that represents the closing high from May 2015.
Looking at the 10 minute chart of SPY you can see that price trended down all day until hitting support.
S&P 500 Index ETF (SPY) 10-minute
Once support was hit price traded around it for about an hour trying to catch a bid then boom…down it went in the last 20 minutes.
I hate to predict but it looks like we might get some follow through price action to the downside next week.
Bond prices got slammed as well trading down into support.
20 year Treasury Bond Fund (TLT) daily
Fed speak spooking again and it’s not even Halloween. Speaking of Halloween I hope someone has a party because I know what I’m going as…a Pastafarian…put pasta strainer on head with braided spaghetti coming out of the little holes. Feel free to copy my idea unless you are going to the same party as me. haha
Check out Rio de Dinero…
Brazilian Index ETF (EWZ) daily
EWZ tagged resistance on Thursday and just got crushed on Friday…down 5.75%. I love it. We’re currently short EWZ for those of you who don’t know. Who said the market was random? Insert rhetorical question and sarcasm tone. Next stop probably just under $30.
Volatility is likely to increase as we go into Fall…no pun intended. It’s my favorite time of year. In the desert we get cooler weather and look forward to winter when it gets down to a bone chilling 75 degrees. At the beach all the tourists are gone and the blue sky days make the ocean look magical. And let’s not forget the spectacular Fall colors in the mountains.
On second thought, don’t sell everything. Let’s hope for a mild correction that presents us with an opportunity to buy some stuff on sale.
Continue to hold open positions.
Trade Smart,
Don