S&P 500 close = 1087.24

Signal = L/S

Position = N

The day started out quite mixed. Markets were up and down for the first hour. Then, markets broke above the minor resistance level of 1099 and hit a high of near 1102 only to start the downward slide. It took a while before the 1093 level was taken out, but once that happened the markets slowly continued down the whole day. The momentum on the downside was a little lacking and never escalated. This made be be a little more cautious about continuing to hold my BGZ position that I initiated at the 1093 breakdown. I had mentioned the 1087 level throughout the day saying that would be the next support level. That level represents a fibonacci level and is also the area of the 5 DMA. Interestingly the markets closed right at that level. So, what now?

If we break down below 1087 tomorrow morning and stay there for at least the first half hour, then the next stop could be 1075. However, all of the time frames from the 5 min to the 60 min are now oversold. Given that we are oversold near a decent support level, I think a small bounce tomorrow is fairly likely. I am in cash for the moment and will be watching for clues to see which way we go tomorrow. The levels to watch for tomorrow are:

1094 - previous support level, now a decent resistance level

1087 - fibonacci level, 5 DMA area; a decent support level