No new trades tonight.
Stocks are getting whipsawed back and forth, which can make trading exceedingly difficult. The Dow Jones Industrial Average just delivered its seventh triple-digit move in a row. The last three days have seen a surge in volatility with the Industrial average down -272 points, +275 points, and down -335 points today.
The S&P 500 has also been very choppy over the last several days. Both the S&P 500 and the NASDAQ have built a bearish trend of lower highs over the last three weeks. At the moment the S&P 500 sits on prior technical support on its simple 150-dma. I suspect we are going to see this large cap index drop toward round-number support at the 1900 level, which is also near stronger technical support at its simple 200-dma.
The outlook for the small cap Russell 2000 index looks worse. The $RUT has broken down under major support in the 1,080 area after having spent the nearly all of 2014 building a major topping formation.
Such a drop might fuel a rally in the volatility index (VIX) toward its 2013-2014 highs in the 21-22 zone, which would hopefully signal a new market bottom.
Momentum would suggest we trade down tomorrow but there is a chance that bears do a little short covering ahead of the weekend. With so much uncertainty we are not adding new plays tonight.