In a sense, the shocking ADP jobs report gave an excuse for the market to take some pressure off its overbought condition. A few days ago it probably would have rallied on "further signs of a pending bottom!" As noted in last night's ETF Rewind, the SPY RSI-2 reading had been over 90 for five consecutive days, this was an incredible statistic. I will post a mini-report on this ahead [POSTED].
For now, we are holding just below S2 (SPY $91.80) on negative cumulative tick, increasing down volume and a moderately rising VIX. Should we sell off more today or later in the week, I would anticipate potential support near $89.00. Continue to keep an eye on movement around and off of the now flattened VWAP. And if you think our 2% drop is something, take a look at India (IFN), down over 7% on reports of major accounting fraud.
Recommended Blog Series: MarketSci on TradingMarkets,
1. Buy New Lows, Not New Highs
2. Buy the Market After It’s Dropped Not After It’s Risen
3. Don’t Fight the Long-term Trend
Never Investment Advice