Even if the crash had not happened, we were still well on our way to having another bearish day, with weak, short lived bounces and constant selling pressure taking out many levels of support. In light of what did happen at 2.45 p.m. today, however, it seems foolish to even look at charts, let alone try to analyze them. That is, until I perused the weekly $SPX.
Make of that chart what you will, but I take the price action in the market seriously AT ALL TIMES. Was it a fat fingered trader or a computer glitch? I have no idea. What I do know is that reward relative to risk remains at an unattractive level for me to put on any swing trades at this point. I have been preaching that you should hold very high levels of cash, and I still believe that. If you are an expert day trader, then by all means get your game on. For everyone else, however, cash is king. You should never panic, but any bounces–however exuberant–should be used to lighten up. Yes, gold is looking good, but don’t forget the ease with which it deflated in 2008 during all of that deleveraging.
Given the volatility, selling volume and uncertainty, this market is not healthy, not bullish and, in my humble opinion, not currently investable.