Good morning traders, having some computer issues this morning so I asked Adam to share his morning thoughts from his daily market letter at www.themacroreport.com

I will be on twitter  highlighting some of  my trades and my market view during the day. Follow me @ JoeP_SMB
“Equity markets around the world have had nearly two months of smooth sailing—an easy uptrend without any real volatility or even a substantial pullback.  Tuesday’s market drop was a clear warning shot across the bow, and we suspect that market psychology will be a little more complex in coming weeks.  It is possible that markets will shake off the drop and head higher; this scenario will be easy to identify as the S&P 500 (cash) will easily lift 1,185 and head higher.  Far more likely is that we spend a little time here, chopping back and forth and perhaps even testing some deeper support around 1,130.  Regardless, the key is to be flexible with your bias, or, ideally, to have no bias, until the market is clearly holding above 1,182 on the futures (118.70 SPY) or is showing clear weakness by holding lower lows and lower highs towards the 116.00 level on the SPYS.

This morning, watch 118.70 as the critical inflection point for SPY.  Above that, levels become less important as it is smooth sailing.  To the downside, watch 117.80 and then 116.90.  Be aware that we are in an environment where price action and market structure trump simple support and resistance levels.”