READY FOR THE NEXT MOVE DOWN?

We rallied today off of the 1040 area on the S&P 500. If you have been following the blog for the last few months, you know that this is a key support area. This was the initial downside target for this latest move down. The rally off of this 1040 area later in the day represented a rally within the downtrend. This was expected. We should move back down very soon...possibly tomorrow. I see a possibility where we could go a bit higher and fill in Tuesday's gap (around 1067 to 1068 on the S&P 500). The put trade is to enter tomorrow and place a stop above 1067 or 1068. If we move above that area, we would need to stop out and re-evaluate the rally. If we move below today's low within the next few days, it would significantly increase the probability that we are going lower. For those that are trading more cautious, you would want to wait for that confirmation before getting in. The next downside target is 1010 which is the 7/1/10 low. There are a few more key economic reports coming out tomorrow and Friday which could continue to drive the market down. For an economic report calendar, you can use the following web address: http://www.bloomberg.com/markets/economic-calendar/