Since early October, a big question for us has been, “How low can US Stocks go? Obviously no one knew then, and no one knows now, so all we did know was that we did not want to own stocks. We wanted to be sellers, not buyers. Go to cash and ask questions later, type of mentality.
We’ve looked at declines in Crude Oil and widening credit spreads as a gauge for what to expect out of stocks. We’ve been monitoring market breadth for evidence of confirmations of declining indexes or whether they’re diverging from them. These internals studies and intermarket analysis techniques are great and incredibly helpful in any environment. But today I want to focus on specific prices levels for the two most important indexes in America. [Read more…]