The markets broke down through support with a sharp move higher in the VIX. Although this is a bearish move in the markets, it is nice to finally see conviction in a direction. Multiple days with increasing volatility has extended the bearish sentiment and moved the markets into lower levels.
We aren't expecting the markets to "collapse" from these levels, but moving higher from here could prove difficult without a catalyst. Look for new bearish trade opportunities moving forward. Don't expect the markets to continue lower without a strong reaction by the bulls over the next few days. Keep in mind the shorter-term corrective action vs. the longer-term trend as we move closer to the end of 2016.
Keep an eye on the 200-day SMA of the S&P – it is a major support level for the 2016 uptrend.
See you on this Sunday's live Trading Room class!
Have a great night,
Your Maverick Trading Team
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