Geez, that’s the last time I complian about the market being boring. I mentioned yesterday stocks were stale, and laid out a tentative bullish/bearish outline for when (or if) the time came for a little movement. I then wake up this morning, and WHAM! A little bad news about unemployment and retail sales sent ‘em all tumbling. Anyway, here’s a quick recap and game-plan…

All of the support lines I plotted yesterday? Yeah, well, they’ve all been broken. Technically that’s bearish, but I want to come back to that in a second.

I’ll show you two of these charts - the S&P 500, and the Russell 2000. Here’s the S&P 500..

…and here’s the Russell 2000…

All the charts are showing the same problems, but to me, the Russell 2000 looks like it has the farthest to fall before support is found. Ergo, if you’re looking for a trade, that may be the optimal one (though it doesn’t entirely matter). That was the bet I was making a week ago with my Russell 2000 puts, though I was about two days early. Talk about regret.

With all that being said, today’s ridiculous. Losses in the 2.5% to 3% range on some relatively meaningless news that shouldn’t have surprised anybody? What happened to the strong GDP numbers that prompted a rally last week? Do they not matter any more?

That’s the point - they don’t really matter. The effect of economic news lasts until the next batch of economic news comes out. So, I don’t think unemployment claims and retail sales will even be on the radar tomorrow.

Besides, when you see a selloff of this magnitude, the odds say you don’t follow it up with more selling the very next day. A little weakness can follow-through. This kind of destruction is tough to re-create two days in a row.

Or to say it an easier way, I’m not looking for a bearish day tomorrow. Maybe a flat day, or even a gain. However, now that the damage has been done (support lines have been broken) thanks to retail and employment data, the market will have a tough time repairing itself quickly. I think tomorrow and perhaps even early next week will be mildly positive sessions, and then, WHAM! again. Off we go back to lows from a couple of months ago.

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