The Russell has spent three days under support at 1,500 but managed to rebound back over that level. While that is encouraging, it is also a warning sign that we spending the majority of the intraday hours under that level. This could change dramatically at any time if dip buyer sentiment changes.
Thursday's drop was caused by a minor comment by a Chinese official. People's Bank of China Governor Zhou Xiaochuan warned Thursday against excessive optimism that could spur a sudden collapse in asset prices. He cited a concept known as a "Minsky Moment" meaning a plunge in asset prices following unsustainable market gains or the exhaustion of credit growth. It was named for Hyman Minsky, an economist who argued that long bull markets can lead to major collapses. Since this current bull market is 8.5 years old and will be nine in March, there are always a number of analysts looking for the end.
His comments coming on the 30th anniversary of the historic October 1987 market crash, traders were especially reactive. Today's market hiccup could lead to further profit taking but the rebound back to positive territory suggests the dip buyers are alive and well. The 1987 market crash came after a 40% rally in the prior 8 months and with a strong economy. The markets never "need" an excuse to crash. With the potential for additional negative headlines over the next three days, I see no reason to add positions ahead of weekend event risk.
NEW BULLISH Plays
No New Bullish Plays
NEW BEARISH Plays
No New Bearish Plays