As expected, there was a lot of anecdotal alarm on Fast Money, Dennis returned to revel in the fear, and the Drudge Report added to the drama, on cue:
All this because the market got below the 1858.38 cited yesterday which turned the bounce into a three-wave correction. All this because the S&P was down 37 points but only closed just below the 38% Fibonacci support level. From a technical perspective, nothing has really happened yet.
What will these people do when the market really goes down?
There are two important Fib targets now. 1812.74 and 1775.79. If the first level holds, there is still the potential for a wedge pattern to new all-time highs.
If the first level breaks and the market continues to the second level, the odds increase dramatically that perhaps a top is in. But even then, it would be better to see the Feb. 5th low get pierced (1737.92).
All this is why I took off half of the UVXY position yesterday. Right or wrong.
I'm as much of a bear as anyone, but as bad a yesterday was, it would be very easy -- from a wave perspective -- to break the downtrend structure unless there is ample follow through. True, last night's futures action suggests this maybe ready to happen, but it's what happens in the regular cash session, on the cash index, that really counts.
Until TSHTF, I'll be a defensive bear.
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