Here’s what we know. Let’s keep it simple.

PRE-OPEN MARKET COMMENTS TUESDAY – Take all of the fundamentals and throw them out the window. We don’t need them. All we need is price.

When we have stubborn price movement with mixed overlapping candles it is a sign that there are buyers and sellers. If there is a trend, it will be gradual.

When we have long candles with little to no overlap and very little retracement back into the previous bars, the move is strong. Gaps between the D1 bars indicate a sense of urgency and one side is aggressive. The market travels a great distance in a short period of time. In the last three weeks the SPY has traveled more than 10% and that is the environment we are in. The QQQ has traveled 15% during that same time frame.

This is a sign of heavy selling pressure. Make no mistake, there is plenty more downside. Don’t listen to the analysts and “gurus” on TV. They don’t know @#$%. The price action is telling us that large institutions are unloading stock. I don’t need to read months after the fact that Warren Buffet unloaded half of his Apple shares, we could see it in the price action weeks ago.

We also know that the market takes the stairs higher and the elevator down. Big drops often result in big bounces. The move in the last 3 sessions has been dramatic. We should expect one and that will provide us with a great entry point for shorts.

We were just starting to embrace the short side and the bottom fell out before we could truly establish longer term short positions. That’s OK. We don’t need to chase. The market will bounce and when that happens we will have our window of opportunity. The bounce will also provide us with valuable information. We want it to be suborn, we don’t want it to be tall and we don’t want it to last long. A move back to the 100-day MA in the next week would fit the bill. That is where I would be looking to take some short positions. I might be a little early at that level, but I am not going to wait for the rejection. The price action has been bearish and I don’t want to miss the next leg lower. I know that taking a position before I see resistance means that I might take some heat on the shorts initially. When I do see resistance and the market starts to roll over, I will be ready to add.

This has to be your swing trading mindset next week.

From a day trading perspective, buyers and sellers have been busy. Be fluid. Wait for the direction to be established early in the day and don’t get married to one side or the other. After a decent market bounce, you need to be more cautious with day trading longs and you should favor the short side.

That’s how I would be trading right now.

Support is at the 200-day MA and resistance is at the 100-day MA.