Two things could send the S&P 500 lower here. One, the ominous bear flag pattern (connect tops and bottoms of recent consolidation pattern from August 2011 to now). And two, an eerie sight we last saw in 2008.
Just like we saw back in 2008, once the S&P broke below the 50 and 200-day moving averages, it sank from around 1,200 to less than 800 in months. That set up is happening again now. We need to hold the 200 or we’ll fall to 1,000 or less within weeks.
The best way to trade this S&P 500 downside is by holding your current VXX calls, I just told options readers. Volatility will continue to spike on this fine little economic mess we found ourselves in.
Beyond that move, it’s any one’s best guess because, let’s face it, we’re in for some economic hardship.
The average American is facing some of the worst economic headwinds in history. And while things will eventually improve down the road, things are expected to get worse… much worse.
