The selling continues and we are really seeing some really ugly levels on the indexes now. Yeah the brains on CNBC will tell you the Dow closed at 8279 but what really matters is the SPX. This broadest measure of the market closed today at 909. We are now down about 40% from the highs and getting dangerously close to retracing ALL of the gains from the prior bull market of 2002-07.
We have pretty much blown through all sorts of support like a hot knife through butter. Looking all the way back to the end of 2002 and early 03, I see some support at 900, 880, 875, and 850. Below that and we have serious problems. I dont think we will see those levels but we could see the high 800s Friday.
I fully expect us to gap down Friday as the futures are already at 895 as I type after a low of 881 when Asia opened down gi-normously. As of this posting all Asian markets are down between 4%-9% with Japan taking it on the chin at 9%.
This week it has been strictly a scalping market and I will be looking do just that again Friday. But honestly if you arent experienced and dont have to trade, then don't. This is the most volatility I think we will see for a very long time. The VIX topped at 64.92 today! Implied volatility in the options market is simply off the charts. We are setting up for a huge snapback rally in the next few days but I fear it wont be Friday. Looking back in history there are almost no occasions where a market bottom comes on a Friday.
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