The S&P 500 is down a swift 9.85% since my warning on the 6th that the market was getting too complacent.  Earnings headwinds and bank concerns have resulted in very quick losses across the board.  At this point I am beginning to get a bit more constructive on the long side, however, the market does not represent a strong risk/reward trade at this point.  8,000 should serve as a strong psychological support and 7,500 is my Maginot Line.  Not only is 7,500 a 50% retracement of the entire 1980-2000 bull market, but it is the most recent market bottom.  Both levels could serve as good technical trading levels to keep an eye on.  The overall market, however, remains in a very severe bear market and as of now I see little to no reason to be putting long-term capital to work.

Earnings remain the focal point.  Over the prior 4 earnings seasons the market has entered very steep declines over the course of the first 3 weeks of the season before becoming severely oversold and bouncing.  Visibility is about as low as I have ever seen it heading into this earnings season so I would not be surprised to see very little commitment on the buy side.  Investors simply don’t want to own stocks before their earnings are reported.  Further declines are likely ahead, but a tradable bottom could be seen in the coming weeks.  Stay tuned….