Thin but Below

Although Wednesday the market traded on a low – and slightly positive – volume, SPY remained below DMA 25×5, which increases the odds of a short-term downtrend and probably a nearing sell-off. Check out the chart and notice how indicators continue to turn negative:

In my view we should have some sort of a sell-off in the next couple of days, so the scenario of a short-term bottom between the 30th and the 5th remains intact. Otherwise, I’ll start covering my shorts. Volatility decreasing is the only disappointing element in the whole scenario, which is delaying the profits in my positions (after catching the tip of the top on 12/17 to go short, I’m still even!). But I believe that, with a little increase in volume, stocks will go down in a more significant movement and volatility will go back above 50.

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