OptionsVest

The US stock market opened higher today, but closed sharply lower. In candlestick terminology, we had a bearish engulfing pattern. Both the Dow and the S&P tested resistance levels and lost the battle. The VIX on the other hand tested support and won. Neither one of these is a good sign. Last week’s low will most likely be tested again before this market breaks through on the upside. The question right now is, will that low provide support, or prove to be a bump in the road? Uncle Ben may have an impact on that later this week. While bearish option strategies looked like a good call at the close, you may not want to chase this market if it opens significantly lower on Monday morning. Might as well wait to see if the FED has cooked up another serving of rate cuts this week before taking any more action.

- JD