Selling Pressure

Where to begin? Probably last Friday, as today felt almost like an exact replay, starting with a mega decline in Shanghai on inflation and tightening fears. That, of course, led to massive selling in all of the industrial commodities, which prior to QE2 had been rallying like crazy. Add in the emerging dollar strength, and you had the brew for a drubbing all around. Oh yeah, Korea hiked rates. The tightening is not confined to China by any means. There were a ton of headlines in Europe today, and yet, not actually any news. Mainly it was a lot of back and forth and conflicting lines regarding Ireland, which insists that it's okay and funded through the middle of next year. However developments could come any moment, especially with the European Financial Ministers meeting in Europe. At one point there was talk about Austria not wanting to pay into the Greek bailout, and Greek CDS skyrocketed. Of course, you can't talk about today without talking about the collapse in commodities, which includes soft commodities, industrial commodities, and the precious metals. Gold and silver got bludgeoned, proving once again that a hedge against market chaos, they are not. The currency market was also fascinating, because despite all the chaos in Europe, the euro didn't lose much...in fact it was up against the Swiss Franc and Japan.

All in all, a solid red day. As we mentioned yesterday, a time for caution was warranted. Our subscribers caught some great moves to the downside using their swing charts. Congratulations to those who did. Take a look at this AAPL chart that one of our subscribers sent in. An 18+ point profit. Excellent! How about the SPY chart? That was only good for 4+ points so far. Honestly, we can go on and on but we let the charts speak for themselves. We mentioned a break below 1180 SPX would change our stance and we got it. We expect a bounce in the next couple of days. We will be establishing new positions across the board accordingly with our chart signals and support/resistance areas of confluence. Good trading to all.