More Downside Potential

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Although I took profits off the table on a variety of large six-figure positions today, all of my small positions are still very much in place. There is still a lot of potential in many of these positions.

Looking at the NASDAQ Composite, you can see how we spent three months fighting our way back to the tinted blue zone (which is where all hell broke loose last autumn). We got back up to significant Fibonacci retracement, and then we started pulling away, only falling hard today. I've tinted in yellow the ~100 points left I think we're going to fall before real stabilization might take place.


I haven't been as aggressive on my gold bearishness as I could have – – for instance, I was short GLD, not GDX (which tends to be much more volatile). GDX got absolutely whacked today, and it's clearly broken its ascending trendline.


As for the S&P 500, we're meandering down to 880 or so. At that point we may bounce between 880 and 920 just to torture bulls and bears alike. A break below about 875 would make heading to 800 a definite possibility.


I find it interesting that recent action in XLF – the financials – is virtually identical to what we saw last December (and we know what happened after that.)


Days like today are what I live for, and they make the waiting worthwhile. Congratulations, everyone.