To: Friends and Family
Subject: Market Update - triangle breakdown
I will be out of town next week, so not sure what my schedule will be, but wanted to get an update out b/c a ton has happened since last week (in case you didn't notice)!
Im getting pretty comfortable with the bearish picture. Once this triangle breaks down (today), give it 2-3 days for confirmation or another down move and my bearometer ticks up to the next notch of 75% short. Once $800 on the $SPX is taken out there is little support all the way down to new lows and I expect to be heavily short. Theoretically it should all happen pretty quick, like a huge move next week with 3+ big down days, but if I start to see smaller embedded waves that will mean a slower grind all the way down similar to today's action (gap down, small rally, sell off, repeat).
Bottom line, Bear case has gained a ton of ground this week and I will continue to add to my short position as the triangle continues to break down. Sell on Rallies should be your normal thought process now. For hedgers I would think about buying some TZA, the 3x inverse russell 2000 etf which will protect you an any big downside moves.
Exact same chart I sent last week, just updated for price movement...
Good Luck and let me know if you have any questions. Once again, let me know if the chart looks funky.
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