Weekly Watchlist 10/26

As the week gets under way the market has already dumped after a nice little bull trap this morning. I think last week's negative action after positive earnings reports was the red flag to lighten up on your longs and even nibble on some shorts. 1100 SPX proved to be a wall each time we tested it and other indices like the RUT and IYT signaled bearish divergences as the SPX tagged new highs.

I think this sets us up for a retest of the 50ema on the SPX which stands at 1046. There is also a downside gap on the ES at roughly 1054 and another one at 1037. Short term the dollar is rallying and that is guiding the market down and commodities are getting the hammer for now. If the SPX loses the 50ema we could see further pressure down to 1020. This looks like it could be the 5-10% pullback that most have been awaiting for awhile.

Watchlist:

Longs>> CHS, RL, UUP
Shorts>> X, CHA, LMT,  NAV, MET, TM, ZION