WELL...WE WERE WAITING FOR A BIG MOVE

I've been saying for weeks that the bulls and bears are wrestling for control of the market. This is what has caused so much back and forth movement. I told you that the smartest thing to do was to wait until the market gave you a clearer direction on where it wanted to go next. Today might have been that day. I mentioned last night how much bearish price action existed in the market yesterday. Today we saw the reason for that bearish price action. The sell off was big and it was broad. It's been a while since I have seen so much red on my watchlists. The only thing green were my inverse ETF's (which go up when the market goes down). There are several reasons to believe that the selling hasn't stopped. First, that was a big move down...and the volume was decent. Second, the market closed at the lows of the day which tells me that there weren't any buyers at the close. Third, the VIX spiked up pretty high after sitting on that historically low level of 15...I'm glad I had those VIX calls to protect my bullish positions. Lastly, there isn't a QE3 out there to provide a safety net. I'm not ready to call for a crash. There are still a few scenarios out there that show the possibility of the market going higher down the road...but in the short term, I think we will test 1295 on the S&P 500. With the troubles in Europe likely to continue, I like this "pair" trade...puts on the FXE and calls on the UUP. It looks like the dollar (UUP) could rally and the Euro (FXE) could drop. Both charts look like they are making trend reversals. I'm still waiting for this trade. I want to see the FXE drop below its 10 day MA and I'd like to see the UUP move above both its 50 day MA and 10 day MA. I like the September options on this one because it could be a longer term trend...and the options are fairly inexpensive. If the dollar does start to rise again, it will put more pressure on commodities (oil, gold, silver, etc.). I think I'm ready to call for puts on the SLV. The chart looks like it is ready for another move down...or at least a move down to $32. I'm also looking at puts on the OIH. I'm looking for just a modest move down to $144 for now.