Bearish Signs Abound

Despite closing in positive territory, the markets were unable to mount an impressive rally...not a good sign with the presently oversold conditions. The averages were unable to break the current down trend that's present on the hourly chart.

Several things about the present market environment concern me, including: the recent dramatic rise in the vix, the continued selling off after the release of good news (both earnings and economic), the ugly technicals (i.e. moving averages crossing over and falling and MACD divergence/MACD crossing zero line on daily chart), and the upcoming fed interest rate decision. All of these things concern me to the point that I unloaded most of my portfolio today with the exception of one small tech stock (tsys) because I don't feel like I have any edge in this market. Here's a hourly and daily chart of SPY with some annotations:The dip buyers may appear and turn this little scarry slump into a great buying opportunity, but for the reasons stated above, I'm sitting out for now. If anything, I might dabble on the short side, but will probably only day trade for now, at least until I get a short sell signal on the indexes from my TLT Trender v2 system.

As for the fed interest rate decision on Wednesday, I'm having trouble anticipating ways that it will be positive for the market. At best, it will probably leave market participants complacent and more likely than not, it will give people a reason to sell. I don't want to be in the market if the fed decision positively impacts the dollar, for whatever reason, and everyone heads for the exit at the same time...that scenario would be ugly. As always time will tell and it's our job to sit back and let the market dictate what to do.

Be careful out there.

TLT