The SP500 traded as low as 1046 and then bounced closing at 1051. The break to new lows below 1055 were not rejected. Hence, sellers continue to remain in control. Make no mistake. No move down goes straight line. We are nearing some short-term support a that suggest to be aware of a possible bounce.

As previously written a failure at 1055 levels likely sets us up for a high probable move toward the July lows. The 1000 level could be revisited by SP500 during the next leg down.

SP is dating with the lower channel line indicating short-term oversold condition. We might see short bounce before the markets continue their march to July lows. To avoid such a revisit, the bulls should step in soon with substantial power. That is not very likely to happen. However, the upcoming jobs report might spark a rally that forces the bears to cover offering us a juicy shorting opportunity.

It is somehow remarkable to notice that the markets have handled ugly economic data surprisingly well. The very same time some cash rich companies take advance of the depressed valuations making strategic acquisitions. This kind of behavior is a hint that the market bottoming will be starting or is already in progress. Also there is a lot of bearishness out there which usually indicates some kind of bounce to be more likely than a full scale sell off.  However, the 1000 level is like to be revisited and perhaps taken out before this correction is over and the next phase of this market might step in. Be prepared to trade the market as it is and have your trading plan for different market reactions. In case we will witness a false downside breakout of the July lows during the upcoming days and weeks, we need to be ready to take advance of a fascinating bounce it might spark.

Trade safe!

Matias