The S&P Futures dropped below 780 shortly after the close yesterday, and then spent the night slowly rising up to 792.9 (9am EST). What’s important when watching futures isn’t so much the level of where they are as the direction in which they’re moving to give a clue about market momentum.
So this indicates that the market should move somewhat higher today. In terms of trend, watch whether the S&P can pass the 800-804 area or not to determine if this is a legitimate move (remember – what was support going down becomes resistance going up). The market never goes straight up or straight down – there’s always a few zigs and zags along the way – the question is whether the zig/zag is meaningful enough to change the overall prevailing trend – otherwise just hold on and stay with the trend. I kind of doubt that the market has enough strength to successfully challenge the overhead resistance – it barely had enough strength yesterday to move much at all. But you never know…
Stick with the inverse ETFs (SKF/FAZ) today even though the account may incur a small loss for the day. It’s not worth jumping in and out unless the trend changes. Anyone who was out of FAZ on Tuesday mostly missed out on the 15% move right at the open. You bounce back and forth to avoid minor losses and you end up missing some big gains. Of course if the S&P moves up above 800-804 in a very convincing way we would jump into UYG/FAS to take advantage of the trend change. If that happens I will post word.