Twenty Percent Tuesday – Bull Market Correction Hits the Full Monty

February 09, 2016 at 08:19 AM EST

Down and down we go – where we stop, who the Hell knows? As you can see from Dave Fry's chart on the right, the Nasdaq is heading to the 20% correction line at 3,760 – back to the lows we tested in August's flash crash and, before that, back in October of 2014. Both times we quickly recovered and maybe this time is different but, for now, we're expecting a move back up ( see yesterday's post ) as we bounce off these technical levles. Of course, expecting a move back up doesn't make us bullish – just bounceish . The problem the markets are having at the moment is we're not getting a proper sell-off because, pretty much every day, the HFT algorithms kick in and prop up the markets into the close. This prevents an all-out panic from sending the market even lower but it also prevents us having one of those big capitulation days where we finally find a floor. It's loads of fun if you play the Futures for the quick in and out moves. Yesterday pre-market, for example, we picked a few longs that worked out into the open, then quickly stopped out at the markets turned lower but, on the EU close, we were able to come back in and again for the usual 2:30 pump job. As I often say: We don't care IF the markets are manipulated as long as we understand HOW they are manipulated and are able to place our bets accordingly . Oil had a nice $500 per contract run, back to $30.50, twice yesterday and this morning we like the Nikkei ( /NKD Futures) at the 16,000 line to play for a bounce back to 16,300, which would pay $1,500 per contract if all goes well. If we keep tight stops below the 16,000 line – we risk very little against a nice, potential reward. Other bounce levels we are looking were detailed for our Members in yesterday's Live Chat Room as we called the usual "rally" at 3pm : …

NDX WEEKLY Down and down we go – where we stop, who the Hell knows?

As you can see from Dave Fry's chart on the right, the Nasdaq is heading to the 20% correction line at 3,760 – back to the lows we tested in August's flash crash and, before that, back in October of 2014. Both times we quickly recovered and maybe this time is different but, for now, we're expecting a move back up (see yesterday's post) as we bounce off these technical levles. Of course, expecting a move back up doesn't make us bullish – just bounceish.

The problem the markets are having at the moment is we're not getting a proper sell-off because, pretty much every day, the HFT algorithms kick in and prop up the markets into the close. This prevents an all-out panic from sending the market even lower but it also prevents us having one of those big capitulation days where we finally find a floor.

SPY 5 MINUTE It's loads of fun if you play the Futures for the quick in and out moves. Yesterday pre-market, for example, we picked a few longs that worked out into the open, then quickly stopped out at the markets turned lower but, on the EU close, we were able to come back in and again for the usual 2:30 pump job. As I often say:

We don't care IF the markets are manipulated as long as we understand HOW they are manipulated and are able to place our bets accordingly.

Oil had a nice $500 per contract run, back to $30.50, twice yesterday and this morning we like the Nikkei (/NKD Futures) at the 16,000 line to play for a bounce back to 16,300, which would pay $1,500 per contract if all goes well. If we keep tight stops below the 16,000 line – we risk very little against a nice, potential reward. Other bounce levels we are looking were detailed for our Members in yesterday's Live Chat Room as we called the usual "rally" at 3pm:

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