S&P to new lows?
The S&P closed below its intra-day low from early August and punched solidly below support. I suspect we’ll move very quickly to the 1050 area. A small amount of TZA (3x short small caps) can go a long way as a hedge in this environment. Below is a chart of S&P futures (note that futures are 10 points lower than the cash market):
You can notice in the very bottom graph that the McClellan Oscillator is very, very, very oversold. More oversold on a weekly basis than it ever got in 2008. I would imagine we get a relief bounce at some point soon, though the break under technical support was powerful enough that I suspect it might not come until the 1050 area. All of this makes for plenty of excitement though… never a dull moment when markets are crashing.
I think long US Dollar / short Euro remains the safest play to buy and hold for now. Though it should pull back some to consolidate recent gains. The Dollar breakout is indisputable at this point, making all commodities a clear “sell” for now.