The market continues to digest bad economic news that seems to come out daily. The good news is that the market has yet to have a massive sell off. This sideways movement of the market was somewhat expected. A few weeks ago I said that the market would likely move more choppy and sideways as we exited the April earnings season. I told you that credit spreads, debit spreads, and iron condors would work well in that type of environment. This has proven to be true....however, I was expecting more of a choppy rising trend as opposed to a choppy declining trend. The price action over the last month still looks like a correction of the uptrend and not a trend reversal. Watch the 50 day MA closely this week on the S&P 500. If we close below that average, the market will start to look more bearish. The VIX spiked up a bit on Friday which shows that the institutional investors are getting a bit worried. The market looks like it will open lower tomorrow. We'll see if the buyers can show up and reverse the selling. If they can, the market might stage a rally and those bullish picks from last week should do well. If they can't, there will likely be more selling this week. 1295 is still the major support level. We are still a ways from that level. If we drop below 1295, we'll have to seriously consider the possibility for a trend reversal...and a move down to 1250. As I've said over and over, this is not a time to get overly aggressive in the market...bullish or bearish. Be patient. The next trend will likely show itself soon.
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