It was pretty ugly Friday the SPY was down 2.18% on extremely heavy volume. Gold miners and fixed income outperformed while financials, semis, real estate and basic materials got hit especially hard. Fear has returned to the market, the VXX is trading above its 20 day MA and it has broken a down trend stretching back to last April.


The spots I was watching AAPL 203 and SPY 110 held in the morning and provided a modest opportunity to but some dips down on moving averages but once AAPL gave it up around 2:30 it was time to get out and get short.

Most of the etf’s I look at are in the same situation, below the 20 & 50 day MA but well above the 150 & 200 day MA’s. The notable exceptions are the financials, XLF closed right on the 150 day MA and crude the USO closed right in its 200 day MA.

Back on January 6th I wrote about TLT for the 1st time. I made the observation that back in June the TLT broke 89 on the downside and snapped right back but the SPY went down for the rest of the month. It was about a 10% correction from top to bottom 96.11 to 87.

TLT broke 89 on January 8th the day before the SPY put in it’s high 115.13: I know we ticked at 115.14 on 1/14, but its close enough. A correction of similar magnitude now, would get us down around 104.20 which as it turns out roughly coincides with the 150 day MA on the SPY 104.56. I think that may be where we are headed.

There are e tremendous amount of earnings coming out this week including AAPL, AMGN, TXN, JNJ, X, VZ, BA, CAT, QCOM, T, AMZN, and MSFT. Also don’t forget the FOMC announcement Wednesday at 2:15 and GDP on Friday morning.

My plan for tomorrow is going to be similar to Friday, watch how we open and see how stocks react when they get to important moving averages. If more names are bouncing than not I will try some support buys but if you see stock after stock breaking down through these moving averages then move to the sidelines are look for those that haven’t broken down yet and try them short through those MA’s. Again I know that’s vague but there is a lot of news and external events this week plus we are oversold in the short term.