TREND REVERSAL COULD BE IN THE WORKS

We got the gap down this morning in the markets. We were anticipating this possibility. The S&P and DOW futures were down big before the market opened so we knew we would get that gap down. Near the close it looked like the bulls would stage another comeback, but that quickly failed in the last 15 minutes of the market. It really was key today to wait and see how this market closed. The pattern is definitely there for a continued sell off during the next few days. The volume was light today, telling us that there wasn't much conviction behind today's move. I think that will change when traders see how the market closed today. I would expect tomorrow to have much higher volume. It might also have a much stronger move down as well. Look at some of the bullish trades you have been waiting to get into. They might pull back far enough to give you another chance to get in. Watch the support levels on the DOW and S&P 500. We expect the market to pull back, but we don't really want those support levels to break. Look at about 7,400 to 7,450 on the DOW and 770 on the S&P 500. For bearish trades, I would usually just trade puts on the SPY or DIA. The best entry for those trades would have been at the market close today. If we gap down tomorrow, you might be in a position of chasing the trade (not a great position to be in). The highest probability trade might be to patiently wait for the market to finish correcting, then get into your bullish trends. I will try to list some stocks later tonight.