Editor's Note:

There is no denying that today was a very bearish day for stocks. The S&P 500 has broken down below technical support at its simple and exponential 200-dma. It has also broken down below its June lows. The index has also broken down below its long-term trendline of higher lows dating back to spring 2009. Naturally with such a bearish breakdown you might think we'd be bearish - and we are. Yet that doesn't mean we want to open bearish positions immediately.

The S&P 500 is down seven days in a row and has just seen one of its worst losing streaks since 2008. Plus, the March low from early this year found support near 1250. Odds are rising quickly that the market will see an oversold relief rally soon. Of course we do not know how long the bounce might last.

We were tempted to launch new bullish positions on stocks showing relative strength expecting the market's oversold bounce soon. However, upon further study we've decided to not launch new positions tonight.

- James

No New Plays Tonight