Thursday October 2, 2014

$SPY Yesterday’s sell off, coupled with unfavorable seasonality, implies that selling may not be over and any bounces are likely to be met with continued selling. With stocks oversold, we are likely to get at least an intra-day bounce tomorrow. But unless one of central bankers makes a dovish move, don’t expect the major indexes to run back to records any time soon. Stay cautious and be selective.

Yesterday’s Close of the S & P 500 was the third consecutive day of Distribution readings on this major index.  Distribution is defined as a Lower Close on Higher Volume.  Distribution days are not that unusual, this year approximately 23% of the trading sessions warrant such a distinction.  But three days in succession is not normal and over the past three years has only occurred on three or four occasions.  Each time the markets were bottoming and began to recover after a few days.  While my models remain in a sell mode the Alpha One Model remains invested at about 33% Long and 67% Cash.   As I did last week I have been trading Puts on the $SPY as a hedge against the market volatility and will continue to do so.. Additionally, today, we are looking to close out the $URI position on an Opinion Change to Neutral.