1040 Support Gone, Death Cross Looms

The market ended Q2 on a sour note yesterday, and started Q3 today with not much better luck. The good news for bulls is that we closed off session lows today, and the market is now technically oversold and ripe for a bounce. When it will come though is anyone’s guess.

Technically speaking, now that 1040 support has fallen and the head & shoulders pattern has completed itself, much lower prices should follow over the coming weeks and months. Furthermore, in the next few sessions we will see the 50 day moving average cross below the 200 day moving average. Also known as the “death cross”, it is a fairly popular sell signal. The last “death cross” came at the end of 2007 with the S&P 500 at nearly 1500, and we all know what happened thereafter.

With that aside, tonight I want to remind readers that if you want to play the market on the downside, shorting is not your only option. As featured here previously there is money to be made in short / inverse ETFs. SDS was profitable for me personally back in May. ETFs, or exchange traded funds, trade just like stocks and attempt to replicate the performance of an index or sector.

To view a list of popular inverse ETFs, check out my post 40 Inverse ETFs for Bearish Investors. And now onto the charts.

SPX 070110

SDS 070110

VIX 070110

Have a fantastic holiday weekend and I will see you next week.

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