Things are looking a lot less bullish today than they were yesterday. It’s hard not to feel battered after an (almost) 47 S&P point onslaught to the downside, but the uptrend remains intact, and the good news is that support is much closer at hand around 1210, where moving averages meet the 38.2% Fibo retracement from the recent high at 1292.66.
I couldn’t resist doing some nibbling today, picking up stocks yielding 3% and taking advantage of the spike in volatility and lower prices to write a fair number of puts. It seems to me – although as you know, I’m fallible – that the end of the Euroworld is now being priced in, and that the odds now favor potentially bullish surprises.
With that said, I certainly didn’t get the impression, as I looked at the charts last night, that we were set up for a downdraft like this, particularly since the cause for the huge selloff in Italian bonds this morning was a hike in margin requirements at the London Clearing House, not a material change in Italy’s situation (which, admittedly, isn’t great).
Anyway, the market is what it is, and did what it did; while we don’t normally look for a correction to support to occur in a day, I still don’t see any compelling reason not to look for buying opportunities as we move toward the 1210 level. As noted, I did start some positions today.
Best of luck tomorrow.