Overnight the markets were rocked by Chinese markets as the Shanghai crashed more than 8%. Concerns over the Chinese economy and its ripple effects were the talking heads excuse for the selling. The Dow has been in a downtrend and the S&P 500 has been able to tread water since May. Today’s selling was not a complete surprise, but the volatility was not something anyone could have imagined. The NASDAQ nearly erased an 8% loss after AAPL had rallied off its lows and was up more than 2 points on the session. However, sellers returned to the market sending the market back lower. Volume was gigantic on the session as the VIX hit 53 intraday. Today’s action certainly was nothing short of epic. However, the likely hood we have marked some significant low remains an unlikely possibility. A late day rally helped the market off the intraday lows as the NASDAQ rallied more than 100 points. This epic volatility is not likely to subside soon. Expect a bumpy ride for now.

What a tremendous way to kick off the last full week of trading for the month of August. August tends to be a very weak month for the S&P 500. So far, August is living up to its name. We are not very much interested in plunging on the long side. There will be intraday trades on the major indexes, but as far as individual stocks we may be a ways from making intraday trades. One thing is for sure this action right here is resetting bases and will set us up for a rally at some point in the near future.

The Chinese markets are certainly under tremendous pressure. Today’s action on the Shanghai show the index set a new multi-month low. Volume wasn’t great, but the Chinese regulators are essentially hog tying longs not allowing them to sell their shares. It will not be long until the Chinese regulators begin to force market participants to buy stock by any means necessary. Like banning selling, this forced buying should do the trick right? Here is the chart of the Shanghai:

2015-08-24_Shanghai_Comp_Daily

Crude oil slumped below $40 a barrel closing with a $38 handle. The fall in crude oil and other commodities has certainly shed the light on falling prices across the globe. Deflation is typically bad for stocks and commodities have certainly been falling for quite some time.

It is going to take quite some time to repair all the damage we have seen from the recent selling. After the Flash Crash of 2010 the lows set on that day were tested more than 2 times over the course of the next few months. The following year we saw the first real correction since the 2008 stock market crash. Not until today have we seen any hint at further price deterioration from stocks. We have been rallying non-stop for the better part of the last 4 years. It seems almost unfathomable we would be able to rally so long without at least a 10% correction. We are not here to second guess or guess the direction of the market. We follow our system and luckily we were not hurt by today’s action.

Due to the events we saw today we are going to offer up a coupon code for 30% off. Use coupon code CRASH to get the discount by going here. While this market volatility appears to be dangerous there will be opportunity for those who remain patient.