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Co-Written by Mish and Forrest

Let’s start with the 4 major indices, the SPY, QQQ, DIA, and IWM.

They all sold off today breaking yesterday’s lows. Besides IWM, they are still not below their recent low from September 21^st.

If the indices continue lower, we should keep an eye on those pivotal points as they could turn into support areas if the market is able to hold this area.

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Watching the VXX, which can be used to determine short term fear in the market, that also jumped up today coming close to the high of 26.65 on September 21^st.

You can see how different symbols are lining up relative to their price points from the 21^st.

The third thing to note is that yesterday JNK was having an inside day, while today it broke below that past 2 days lows and the 200 Day moving average.

This is important because we have been using this to judge the Fed’s involvement of supporting high risk companies.

We also talked about how the market could put pressure on the government to pass the next stimulus bill quickly. Note that once again Powell stated that there is only so much the Fed can do to support the market (I mean economy!)

If we see a continuation of this price action, then keep a close eye on the Dems and Republicans to address the market’s unstable action.

One thing that is interesting to watch right now is the commodities sector. Although gold and miners took a big hit, they may have found a floor. Gold futures at $1850 is key.

Food commodities also held up relatively well. This and once the dollar stops rising continues to support the food driven stagflation theory that now even economist are embracing. It is inevitable given the volatility in the US and globally.

With the market still highly dependent on the Fed, sometimes the best thing to do is wait through days like these. One money injection can turn everything around and give us a much safer short opportunity while we dally in commodities.

S&P 500 (SPY) Its’ all about 322 and if that breaks see 310 next

Russell 2000 (IWM) First to break the 200-DMA-145.10 the 200-DMA

Dow (DIA) 263 support but first we have the 9/21 lows

Nasdaq (QQQ) 260 key and then 233 the 200-DMA

KRE (Regional Banks) 34.00 broke so if cannot take that back, see 32 next

SMH (Semiconductors) Seeing 161 next stop under 164

IYT (Transportation) 195 support

IBB (Biotechnology) 132 key support or its going down to 126

XRT (Retail) Granny caved to the pressure. 50 pivotal

Volatility Index (VXX) 27.05 the 50-DMA

Junk Bonds (JNK) Broke the 200-DMA-large selling there gave us a head’s up.

LQD (iShs iBoxx High yield Bonds) Broke the 200-D<A at 103.50