WATCH YOUR STEP!

Is this floor (support) we are falling to...solid?...or is it rotted? Keep an eye on some key indicators tomorrow. First, look at the futures in the morning. You can find them on CNBC's website (www.cnbc.com) under the "Markets" tab (then "Pre-Markets"). Look for a large up (or down) number. This might give an early indication of where we are headed for the day. Next, look at the support levels. If the DOW breaks below 8350 or the Nasdaq breaks below 1665, the trend could be in the early stages of reversing. The S&P 500 can fall a bit further...to around 880. If it breaks below that, the uptrend would definitely be in danger. There are a lot of stocks at key support levels right now. The patterns are either bullish ABC patterns or they are about to become impulsive moves down. I'm looking for key characteristics of a trend. If the uptrend is intact, then the support will hold and we will be off to break above more resistance. If we break support here, then that is an early characteristic of a downtrend. Lastly, keep an eye on the VIX. The VIX keeps moving down, even though the market has moved down a bit. This tells me that there hasn't been much fear in the selling. Until there is a little panic, we can't move down in any significant way. If we do get a big spike up on a break of support, we want to be able to start turning bearish pretty quickly. The big key tommorrow is not only how we open, but also how we close. You could diversify a bit by looking at these bearish patterns: AAP, NFLX, SMG, NTRS, AZO, ARE, OSIP, GILD, CELG, BIIB, and MYL. Now some of these are riskier bearish patterns because the 50 day moving average has not yet turned downward. The problem is that there aren't many stocks out there that are below their 50 day moving average and their 50 day moving average is turning downward. As with any current bullish patterns, you might also want to look for some confirmation on any bearish patterns. The chip sector sold off today. Tomorrow will probably tell if I was just a bit early in my prediction...or if it was just a bad call. Remember what I wrote yesterday. I don't care about trends that change because I will change with them and keep making money. For bullish opportunities...keep an eye on the gold sector. My guess is that if the market does sell off and break this support, there might be a flight to gold. There was a nice rally today in that sector. Some stocks I like are SA, AUY, EGO, NEM, AEM, ABX, RGLD, HMY, and IVN. For gold ETF's look at GOLD, GDX, GFI, or GLD.