CONTINUATION OR CORRECTION?

The market sold off at the end of the day. We would expect some selling and profit taking to occur after a move like yesterday. The volume was average indicating that there wasn't a lot of fear behind the selloff. The question now is whether or not this pullback creates a buying opportunity or is it the beginning of a larger correction. The next resistance level for the DOW is around 7,900 (about 880 on the S&P 500). That is about 250 points away on the DOW. If we continue to sell off, we want the 7,400 level to hold as support (800 on the S&P 500). If these support levels are broken, we could have a much deeper correction. Any new bullish trades would need to have fairly close stop losses. For bearish trades, you might want to wait and see if the market support levels are broken before getting into those trades. Keep an eye on the Energy stocks. Some of them are starting to break out. Some stocks to look at include MOS, NOV, HES, DNR, and RIG. If we break the support levels in the market, we could see some bearish trades in the financial sector.