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Well yesterday I said I was looking for the SPX to hit 1073-1074 based on the previous day’s trading action. SPX closed at 1073.69. The actual number on the low end was 1073.65 so technically .04, but I didn’t post that number, so lets stick with the 1 point range for a minute.

SPX closed right on this important support. In fact it dipped below and closed above. This is important. There are two scenarios for tomorrow I’m looking at playing.

As I look at my stock screens there are quite a few oversold stocks, however, the market is on the cusp of a potential serious breakdown. When the market breaks these oversold readings linger on for a few more days or even weeks as opposed to when the market is in stronger phases. We aren’t there yet, but like I said its close. So this oversold reading could be the first of ones that don’t work after 1 day.

I cashed out of my 2x leveraged short index positions this morning taking in an average of 2% in the NDX, RUT, SPX combo. Holding till the close would have earned more than a 3% average and hit my target of 1073. However, I had to go to the hospital for a family member and I wasn’t going to be back until later on. Decided to just take a gain. I did this with my overnight FAZ and TZA as well for gains.

When I got back home I saw the market was still down after a very nice intraday bounce. Before I left I threw on a XRT put spread, when I got I bought DRV, JPM put spread, SPY puts, TZA and FAZ again. Everything was a winner except for XRT put spread which I closed at breakeven. SPY puts did the best.

Currently back to all cash. My plan is if we gap open lower I’ll look to be a buyer intraday maybe even sell the open for a quick trade, if we gap up I’ll look to play the upside small.

Stepping back from this day to day trading, the trend is looking better for the bears. Don’t forget that if you are bullish.