Pause Day

The correction paused today, and given the tepid reaction to AAPL's earnings report afterhours, I suspect we will see more decline tomorrow. The market is very oversold. The McClellan Oscillator hit -271 Friday and the Put/Call ratio hit 1.0 as well. These levels often lead to a rally, but the pattern in the price suggests at least 1 if not 2 more declines to complete the first leg down of this correction. Another consideration is the typical end of the month/first of the month rally which is due to begin sometime this week. The rally will setup new opportunities to get short. Traders with short-term short positions may want to consider looking for an exit over the next 2 to 3 days, and then look for a new entry point. Medium-term short positions can be held for bigger gains.