If you recall on Saturday I mentioned that the probability model had given a 15% reading on lower prices today with a final low being put into place on Tuesday of this week.
Now I am not going to pretend that I had looked for this particular action today as a 15% probability is pretty darn close to the category of Ignore. However, what we must heed to is the fact that the 15% probability became the reality and thus takes precedence.
I continue to be concerned about the Put/Call ratio that today was again under 1.00 which shows that the buy the weakness crowd is still in full force. This indicator alone contributes to my thinking that once this intermediate term low is put into place, and a counter-trend rally has exhausted itself the market very well could have yet another leg down which might get a little ugly. Of course we will have to address these possibilities as the unfold, but trying to find a general framework is always a good idea.
Currently the probability model is calling for the intermediate term low to come in sometime on Tuesday and not much lower price wise than where we currently stand. While there continues to be risk on the S&P 500 cash all the way down to 1420, it appears that the worst is over and a continuation of buying weakness is in order.
I have already purchased three long positions in the Aggressive Equity Trading Account and I will look for more opportunities tomorrow.
So to put it all in a nutshell........ We are very close to an intermediate term low and buying weakness still appears to be the prudent course to follow.