The markets pushed below support levels, but closed at very different levels. All three majors made strong moves lower today, accompanied by a spike over 20 in the VIX. Even though we did close off the lows of the day, this bearish move was strong enough to potentially carry over tomorrow. We should always prepare for a counter move, but if the bulls don't post a strong day tomorrow, then we could be in for a little more selling.
We could see some weakness in the markets over the next couple of weeks. Keep in mind the overall state of the U.S. economy compared to other countries. We should expect some market volatility through the election, but take into consideration the longer-term trend (e.g., 1-year chart). A 5% correction in the markets could stimulate investors' longer-term, bringing money off the sidelines into the markets through the end of the year.
Take advantage of the corrective action, but keep in mind the state of the economy and the longer-term trend.
See you on Wednesday's Mid-Week Trading Room Update class!
Have a great night,
Your Maverick Trading Team
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