Get ready for more downside next week

"Oh boy, the market is kind of clueless right now, changing its mood on a daily basis. Yesterday (Sep 18) was clearly bullish but today's price action (Sep 19) is quite bearish, shifting the momentum to downside now. It is very muddy water right now and difficult to manage if not careful. But if you think a bit deeper, you can see how the market is driven by the algorithm-based computer trading nowadays, which is pretty much based on the major support/resistance lines. As I said, S&P 3020 was likely the next resistance for this rally. Well it did seem all the trading computers were setting this up to drive the market up to. We got this level today (Sep 19) and within just a couple of hours, it retreated from the resistance and gave back all the strong earlier gain today and closed barely in green. Very bearish but TA-wise, it makes a lot of sense and gives good traders solid well-defined target to get one or off based on these levels. That's the beauty of mastering some TA skills"


This was the note I sent to my friends last night, expecting a bearish day today. The bulls were still trying hard initially to push the bar towards 3020 for S&P early of the day but failed miserably into a deep red closing.  Sorry bulls! As I said, I don't believe Mr. Market can easily break out the resistance at 3020 (see here) and it has tried at least twice but failed in the past week. I'm happy with the gyrations we are seeing now and today's early bullishness allowed me to add more long positions for VIX. As I said, "I'm gearing up for high volatility"! I mean it by putting the money where my mouth is.


We are quickly entering into the seasonally worst month of the year, October. There are simply too many uncertainties out there that will make traders quite nervous. Having said that,  I'm not expecting a waterfall crash  at the moment but for next week, most likely we will see higher VIX with a plunging market in general. Its next major support should be around 2975 and then 2950. I doubt it will drop more than that for next week as at the 2950 level, it will likely be in a deep depressing mood with a quite oversold condition and therefore should be poised for a rebound. That's how I'm looking at it and my game plan for now. But I will be travelling late next week with a major trip. So I hope the market can be flushed down quickly early next week to allow me to cash out my long VIX position and a few short positions before getting on the road.


Keep my fingers crossed!