It seems that the market has finally begun to take a direction after trading in a range for about two weeks. Monday started a sharp sell off in SPY, opening at 94 and closing below the key 93 support level. Today we saw SPY briefly trade above 93 but quickly sell off to close the day at 91.66, breaking all important support levels along the way. We must also note that we closed below our important levels on relatively high volume (compared to volume done when we were trading in the range), a bearish signal. Finally, keep an eye on SPY approaching its 200 day moving average of 90.15.

Looking forward, SPY has support at 90 and then 88. I am waiting to see if these levels break and if market leaders break down as well. I recommend looking for high probability trades and keeping stops tight until the market shows me a definitive direction.

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JToma