It appears the sky is falling.

If you’re standing in the middle of the road and you saw a speeding bus coming, would you try an catch it or get out out of the way? This is why you have to have a plan. I really expect it might be ugly first thing tomorrow, but some calm will come over the market. Why? Because since this down turn started April 3rd, we have dropped 8% or 114 points on the S&P 500. We also are approaching another major support at $1292, which also aligns with the fibonacci retracement of 38.2%. A lot of time on major pull backs, the retracement falls back to the 50% level which correlates to $1250. So we closed today at $1304 and in my opinion from here forward we need to start watching price even more closely for a possible reversal.

Eventually, the institution buyers are going to look at these levels as a shopping opportunity. They will likely come in strong and we will not be able to get that first leg up, but that’s ok. What we want to do is try and catch some of it. So let’s start looking for a pivot low and maybe with a  little more insurance and we can catch a 2% or more jump up. But as soon as it stalls or reverses, bailout.

So here is the plan. When price starts to reverse, we will be looking for $1352. If price closes above $1352, then the next day as long as price is still going up, we jump in. How did I come up with $1352? Ok let me see if I can explain this properly. Take the high price of the last bar after the reversal starts. Note: Reversal hasn’t started yet, so this is just an example. Draw straight line back until you hit the next higher bar. If there is a gap in price, the first bar to the left that is higher than the one your drawing off of. Do the same with bar 2 and bar 3. Bar 3 is where we want to see price close above before we are willing to take a chance that this is a reversal. This will also give us a pivot low and a lower risk entry. So there you have it. A simple plan to at least give us a chance on being right and if doesn’t workout, we bail.

Tomorrow no matter what the market does, it is a watch and wait scenario. It is a two day process at the minimum for the above plan to work, so we stay safe and wait for the door to open. Doesn’t it feel good for once sitting on the outside looking in at all the destruction? Yes it does.

Unless your gambler or you just got to have it, so you can tell everyone you own it, don’t run out there and buy Facebook the first day it opens to us small change guys. You do know that all the big money has already purchased 16 billion dollars worth and will be putting it up forsale tomorrow so us dummies can buy it?

Just had to post this update of the week so far. Uggggggly !!!!