Friday was a bloodbath in the market. We finally broke through the resistance band around 2815 on the SPX mid-week last week and then immediately pulled back down just below it. As you can see from the chart below, this area has been a popular support level over the past 6 months or so. Keep an eye on this area this week. If the SPX begins to gain negative momentum here, it could easily fall through support and keep falling. On a positive note, this is a support level, so it may make for some good opportunities if the market does turn around.

The Russell 2000 (Small Caps Index), which has been a leader this year is in a similar spot where it has fallen to a resistance point.

There is no positive momentum in the market right now. We’ve basically started with stagnant, barely moving up conditions and now the direction is down but this resistance is close. Since there is no positive momentum, the momentum scanner hasn’t come up with any good ideas except PZZA, which was our winner from last week due to some good news on a sponsorship from Shaq.

I’m going to keep an eye on things for now. I would caution against buying any VIX or bearish ETFs for now because I just don’t think the market has much more to give back right now. A stagnant market will erode any potential gains with these conditions. This may be an option if the market closes tomorrow below this support level but I’m going to wait and see. I’ll update after the market closes. Hopefully we can find a trade for this week.