Fed Official Spooks Investors – It Was Just A Matter Of Time – Watch SPY $217.50

Posted 9:30 AM ET - The summer doldrums continue and trading volumes are extremely light. Daily S&P ranges are compressed and there is no momentum. Even the FOMC minutes did not generate volume on Wednesday. The dip this morning is related to comments from a San Francisco Fed official. He said that there is room for a rate hike this year and that all meetings are "live". That is sparking a light round of profit-taking. In my comments I've told you that this was likely given the strong July labor report. Brexit did not have a lasting effect and those worries have dissipated. I am not overly concerned with the decline this morning. Until I see higher volume and a technical breakdown, I will consider this to be nothing more than chop. I also want to see late day selling and follow through the next day. If those patterns surface, it will be time to buy some puts. I am long BZQ and this is a position I plan on keeping for at least another month. This gives me an overnight negative bias. The rest of my activity is day trading with few if any overnights. The first support level is SPY $217.50. As long as that holds, trade from the long side. Relative strength will be easy to spot today. Wait for market support and make sure that the early round of selling does not gain traction. Once market support is established, trade from the long side. I will try to make my money in the first two hours. After that, the volume will dry up and the price movement will be random. These conditions are likely to continue through Labor Day. . .

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