Pay more attention to the big picture!

We are noticing today’s pre-market is being yonked again. The hope by many was that yesterday was a good washout day. A washout day occurs when everyone who had not sold, panic out AFTER the drop…leading to a near-term low. This occurs on massive volume. So…yesterday does fit the definition. So…today’s open gives the market another chance to defend itself at or near the same levels as yesterday. Another reversal today would go a long way in telling us the markets have found a place where enough is enough. But one cannot predict this. One can just react to this. And to be blunt, that is the trees. The trees are a “1” while for forest is a “10” when looking at markets.

So while we believe a low can be carved out here if we can reverse again, keep in mind, it would be just part of the process we have outlined for you. The topping process took months. The top just occurred. And now that markets are stretched away from the norm, markets will tend to bounce up into the norm as they work off the stretched and oversold condition. Only in price and time does this occur before markets roll over again continuing the process.

We expect more wild swings and a lot of noise that affects markets. We also continue to believe if things worsen, the Fed will intervene with another round of QE. We do believe yesterday’s late rally was in part, the Fed intervening

Regardless, we continue to be in earning’s season where another part of a bearish process is now starting to be fulfilled and that is big blow-ups. In bullish phases, blow-ups do not occur as often. Today, we walk into a gargantuan gap to the downside in Netflix.