What happened today proved the bulls are sitting on the sidelines praying this correction isn’t 8%. Those who had money to invest in this secular bull market, already have, and so with no one else left to buy, the bears have come to crash the party. The bears today came in numbers (massive selling volume) and said they don’t give one sh*t about Italian elections, they know Euro problems aren’t going away, they finally decided to negatively price in the sequester, and they were sick and tired of seeing this rally ensue without any sort of consolidation…until now.
I no longer believe Bernanke’s testimony tomorrow will be enough to buoy this market. Although there may be some kind of Bernanke bounce once his testimony is released, I think the bears are here to stay. We broke through a number of technical levels on a majority of the indices and this is not something to shrug off.
A closer look at SPY:
My March 16 VIX call suggestion from The Week Ahead Report (yesterday’s post) is up 155% today. I knew it was a good hedge but even I did not anticipate such a move.
This week is set to be bloody. Be careful out there.