Overview Monday 17 August...

The bears actually got something going today to start off options expiration week. I was flabbergasted. Though the bulls were able to hold the lows into the close around 980 on the $SPX, they couldn't muster any kind of rally. Volume picked up today, as well. This is ok, though. This is what a correction feels like. Corrections are painful, gutwrenching even. Many times, the biggest recent winners are the biggest losers in a correction. Until the dip-buyers show up, I would be inclined to stand aside and not press much on the long side, preferring to let the market come to me and my levels (and hopefully bottom for me instead of trying to catch the falling knife). As long as this correction doesn't turn into a full-blown reversal, the bulls are still in charge. I'm not inclined to aggressively short at this time, but it's safe to consider shorts again (for now).

Short-term bias: bearish (I'm still maintaining this as bearish, if only because I'm not chasing, but I do believe we had a buying climax)

Intermediate-term bias: bearish (I still think this correction will take us lower, perhaps to 800 on the $SPX and I don't think we're ready to power higher quite yet)

Long-term bias: bullish (I believe we put in meaningful, long-term bottoms in March, and would use the aforementioned correction to increase long exposure)

Pick updates:

As you can see, everything was down today (literally). You will also note that the early cyclicals and economically-sensitive stocks, such as F, FCX, and MAS, took it most bruntly today.

EGO also had a surprisingly bad day, but you can see why I didn't want to chase it last week.

This kind of pullback is bullish in the end because it provides us better entries.

No new additions to the prospects list, either.





Position: long $SPX index fund in 401k