The best trade in this market continues to be selling any rally that shows signs of rolling over. Until we see some improvement in the charts then I would not be trading the long side for more than a quick scalp. It looks like we have more downside on the way. Today's last hour selloff will have me continue to have a short side trading bias into mid week more than likely.
The VIX had a range of around 66-80 today and closed at a new closing high of 80.06. Kind of scared to say but I wouldn't be surprised to see the VIX spike higher and challenge the 100 level if this market breaks down under 840 like I am expecting imminently. It seems like the VIX is still trading at a discount to the SPX 20 day historical volatility and that usually means it should not be considered expensive. I plan to analyze this further in a later post.
Overall, I am bearish but think we are going to see some choppy whipsaw action this week. Don't forget we have a Presidential election in one week so this will be on the minds of those with authority and I do mean the Fed. Will the gov't try to save the market again (and fail, again) during the last week before the election to alter public sentiment? Who knows. Just be ready for anything and only take the highest of probability setups this week. Trade safe!