A Very Obvious Support Level

I am posting the SPY ETF rather than the S&P 500 but to approximate just add one zero. As we've mentioned since late last week, we were looking for a break to about SPY 102 (1020) if S&P level 1040 broke. Once that happened yesterday, the market hung around in the 1037 to 1040 area for a while, and then sold off to end the day.

Now we see a very obvious gap in the SPY chart - the chart is actually a bit off but the levels are

• Sep 4th high: 102.1
• Sep 8th low: 102.4

Hence basically a gap between S&P 1021 to 1024. If we sell off this morning this will be an area to assume some buyers will come in and right below that is a much more important support level, the 50 day moving average - that should be around 101.7.

Every computer in the world sees this, so what will be important is how we behave at these levels. Even if this is the beginning of a much more significant move down - you'd expect bounces off these key areas as people go by the technical playbook. If we do indeed see S&P 1020 (SPY 102) today that would be roughly a 5% drop in four sessions. The largest drop we've had since March 6th has been a 7% correction...

Of course based on people covering their eyes and not believing the reality of what they see every day in the country, and instead based on listening to what government tells them with their magic fantasy dust reports a +/- 50,000 jobs difference versus expectation will mean the difference between rallying or not. Which is quite pathetic when you think about it - that's like staring at a tree in a burning forest and saying "no fire here!"

The portfolio had a solid day yesterday, so even if the market bounces off the government's brand of fiction, I won't be too inclined to chase it up ... but overt bearishness cannot be brought to the table until we make a new lower low, which is below SPY 99.

Only then we can begin pondering the gap fill at S&P 906.