An early morning gap higher on a big turn around in the Nikkei quickly faded into a sellers’ paradise. This market was trading without any excuses from an economic standpoint. We’ll wait for tomorrow’s release of retail sales and initial jobless claims. This market is teetering on the edge of pushing us into full sell mode. Last night Investors Business Daily indicated their model changed to correction mode and as of late has been a buying indicator! At this point chatter is the Fed will taper next week and traders fear the worse. We are going to follow price and at the moment the market appears to be weak at best.

The major market averages are still above their respective 50 day moving averages. A signal of health would be a defense of this moving average. In April the S&P 500 briefly dipped below the average, but quickly found support. The NASDAQ spent a bit more time below its 50 day moving average and like the S&P 500 found buyers to push back through the moving average. It is anyone’s guess as to where this market may head, but for now it is having a tough time finding support.

The VIX jumped above April’s high hitting a multi-month high. Tracking ETFs did a better job keeping up with the index, but still underperformed their stated objective. Sentiment will come out tomorrow and it will be interesting to see if the bear camp grew or not. Last time the VIX was at these levels we saw the major market averages hit new highs. Will this time be different? A question you should ask yourself is do you have a plan of action regardless of what the markets!

At some point this market will find some footing and bounce higher. Will it be able to set new highs or not will be something we’ll be watching. The inability to push higher and losing a major moving average will be a big signal. Stick with the plan and execute.