If you've been following along the past 5-6 market days, I have repeatedly said I don't believe this is the ultimate bottom (or don't believe the bounces) because there was no emotion. I've said we need to retest at minimum the May 7th non flash crash bottom. And that what we really need it the whoosh down bottom right from the open instead of the nonsense premarket games that have become the hallmark of U.S. free markets.
Today looks like that day. It appears we will have all of the above - the restest, the whoosh, and the emotion. In fact barring a miracle in the next 45 minutes we are going to gap down below Friday May 7th's intraday low (S&P 1094)
Now in all those entries I've written we need to see something like this, I've also said the traditional buying point (if for nothing else a counter trend move back up) will be a reversal after the carnage, and preferably a close at or near the high. This would mark some seller exhaustion.
The one caveat we have is May 6th - 2 weeks ago today. In the back of everyone's mind is what this market has turned into... a market where the liquidity providers (HAL9000) who have killed off traditional market makers for the most part, can press ctrl-alt-del, and walk away from the market leaving us with no bids. i.e. get your 1 cent bids in folks - there's some bargains to be had! It would such a damning circus to have yet another flash crash - it seems almost too comical to happen in the sturdiest, and most liquid market on Earth. Do I think we flash crash again today? Seems almost impossible as you'd think our PPT would be ready to flush us with buy orders to save the world from seeing behind the Matrix. But it things get furry, it will be interesting to see if the band of brothers named HAL start rushing to hit HF STOP!
May 7th's intraday low: 1094
May 6th's: 1066
Below that there is a ton of intraday lows right at 1060 from February lows, which was broken up in 1 session (Feb 5th) at 1044.50.
Of course if our liquidity providers disappear and we get another -10% intraday move, these figures will all be quaint.
Since our cash level is so extreme, I see myself making some purchases today - especially if the S&P gets down to the 1060s. Should be an exciting day.