The U.S. markets continued lower, following a confirmation of a bear rally pattern set yesterday. All three majors suffered losses today – just shy of 3% – as China’s weakness continued to weigh on the U.S. markets. Today’s bearish action could have been fueled from a weaker than expected manufacturing number out of China. We have been watching China’s economy slow down for some time now and there really are not any surprises with it. However, it appears to help fuel the bearish action.
Regardless of any cause, these markets remain in bearish control here. We haven’t seen the VIX drop below 24 since this bearish move started. New support on the VIX was set in early July around the 20 level and, since the breakout, has yet to even be tested. This should lead us to believe there could be more selling to come.
We have seen some major swings in oil over the last few days, which can be a sign of a bottom, although this “bottoming” action could last for days or weeks. Best not to try and time any sort of bottom here; rather, let’s wait until one develops with confirmation. This momentum should carry us back to retest the lows set last week.
Have a great night,
The Maverick Trading Team
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