The Market Will Probe For Support – SPY Will Test the 100-Day MA

Posted 10:10 AM ET - Tuesday's low is back in play and yesterday’s bounce was simply noise. I still believe we will test the 100-Day MA. The FOMC, the debt ceiling, November elections and higher HMO premiums will provide a small headwind. The Fed will remain accommodative, yields will not rise, economic conditions will improve and earnings season will be excellent. These catalysts and seasonal strength will eventually push stocks higher. If we do pullback to the 100-day moving average, I will be an anxious call buyer. I need to see strong support and a capitulation low. Next week, we will get a huge round of economic releases (housing starts, ADP, ISM manufacturing, ISM services and the Unemployment Report). Good news could be bad news. Bond Managers will sell bonds if the numbers are good on the promise that the Fed will remove the phrase "considerable time" from its statement in October. As you know from my prior comments, I don't believe interest rates will spike even one the Fed starts to tighten in 2015. The market bid will strengthen as earnings season approaches, but there are a number of speed bumps that we have to navigate first. The selling this morning looks nasty. If we make a new low two hours after the open, I will day trade from the short side. If we close below $198, I will buy a few puts. I hope that we pullback to SPY $195. That move would shake out bullish speculators and once support is established, it would present an excellent buying opportunity. . .

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