Ruh-Roh?

If it were so easy, a cave man would be doing it and probably a lot worse being so much closer in time to the inner monkey. Today I could not help but remind myself of thinking in levels: “I know that you know that I know that you know that I know etc...” It works up to a point, but only in so far as one goes as far as need be. Today was the last day of POMO and I knew it was the last day and you knew it was the last day and I know that you know that I know it was the last day; I should have probably stopped my thinking there. Today's market reaction did seem highly plausible on the last day of POMO, after all.

However, it being so obvious I thought that it would not happen today simply because knowing this date is the date I believed this action would have occurred much sooner. It may have and I just wasn't reading the market correctly or maybe I didn't really care because there was a tradeable breadth thrust occurring in the midst of it. Maybe POMO propping the market really was that simple and the buy until they don't strategy was Occam's razor.

Regardless, what I thought coming into today is no longer particularly relevant to what I am contemplating now. What I thought yesterday is best to reassess today. From the open things were bleak and the blood letting did not cease as the SP sold off for the entire session, closing down 1.81% and the NASDAQ down 2% for the day.

SP 5 Minute Chart

Further, today's sell off also comes on an ominous looking 30-1 down side volume. I look at this as very significant particularly when taken in recent context with the market having a 10-1 upside volume day 4 sessions previously. A potential clustering of 9-1 upside days further supporting this leg has been dismissed. A concept I have not fully incorporated into my breadth assessment but have been observing lately is the Zweig Breadth Thrust which popped above its overbought zone on 06/30 through 07/08, an even that has not occurred during this entire range.

Zweig 9-1 and Thrust

As seen in the image, the SP did push through its range, and obviously returned to the zone after biting on granite in the form of over head resistance. With today being the official start of earnings season it remains to be seen if this will be the catalyst that assist the market through this 5 month long range. Additionally there are a number of macro news events on the near term horizon that may have an effect upon market participants as well such as what is occurring through Europe and Washington D.C. These news related event driven catalyst are beyond the scope of my understanding- nor do I even believe I can make any more heads or tails out of them through flipping a coin.

When I thought by the end of the week there may be some interesting developments I didn't expect them to play out on the first day. With increasing volatility over the past 10 sessions and a downside thrust such as today, I no longer consider the market tradeable on my time frame and with my risk considerations, so I'll simply watch how these events unfold over this week and continue looking for clues.