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Wednesday, October 24, 2018

The market got slammed again today as the Dow fell 608 points on very heavy volume.  The advance/declines were over 3 to 1 negative.  The summation index continues lower.  Oversold, staying that way and the expected bounce that I thought would occur certainly didn't happen.  The VIX is now over 25 and I don't think we'll stay up here forever but what do I know?  The breadth today certainly wasn't as bad as a down 600 market would imply.  But you can't argue with price and buyers have been overtaken by sellers.  It was exactly two weeks ago that we had the huge drop in stocks and I'd expect to see some follow downside through tomorrow.  But I don't expect this to go on too much longer because the technical indicators are getting pretty blown out once again.  I'm not looking for the SPY November calls right here as I was yesterday.  But if things continue to progress lower, I can make a case for them after the weekend.  GE was off 1/2 and the volume remains good.  Gold was off a bit on a higher US dollar.  The XAU dropped 1 1/2, while GDX lost 1/4.  Volume was lighter than it has been.  No real flight to safety for gold today.  Mentally I'm feeling OK.  The stock market is back in free fall mode.  We've crossed the zero line in the summation index and we're falling apart on cue.  Where can we expect to see some support for the S&P 500?  My first guess would be the 2600 level, as that has stopped the previous recent drops.  There is better support at 2500 off of some previous tops made back in 2017 but we are a long way from there.  Perhaps I'll try the SPY calls if we get down to 2600.  At the rate we're going this could happen tomorrow.  But any attempt at the calls here would be fraught with risk because we are in a pretty decent decline here and we are about to hit the 10% correction level for the S&P.  We're now below the 200 day moving average on all of the major stock indices.  There's no place to hide.  So we'll keep an eye on things overnight and go from there.  The sidelines seems to be the safest bet here at the moment.  Europe and Asia were mixed overnight.  We'll see what tomorrow brings.    

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