Swing Trading Strategies & Stock Picks Since 2003

This morning's break to 887.75 so far in the e-minis occurred on the highest volume we have yet seen during the new year. I like to call fast, high volume breaks like this one supply shocks. In a supply shock longer time frame traders suddenly dump (or short) big positions with little regard for the price they are getting because they think the market will move much lower during their own trading time frame. Just how much lower is something the rest of us have to figure out. You already know my answer: the 875 level. But this kind of action suggests that 865 is in the picture too. My downside targets are no doubt much more optimistic than those expected by this morning's sellers.
The point is that supply shocks like this one tell you that the market must go lower over the next day or so to attract buyers whose time frames are comparable to those of the sellers we saw operating this morning. In this kind of situation one wants to be a seller on rallies. I doubt that we shall see the market trade above 900 for the rest of today.