The S&P 500 initially tried to rally towards the 2640 level, but then rolled over to form a bit of a shooting star midday. I think that the market is probably trying to break down a bit more, and if we can break below the lows of the Friday session, I think we will unwind yet again. The 2500 level will be a target, but if we break down below there, then it opens the door to much lower levels. I believe that rallies are to be sold until we break above the 2650 handle, which at that point it’s likely that we would see the market go higher. However, it seems to be more of a “risk off” market, and that of course will weigh upon the S&P 500 in general.
Longer-term, I suspect that we have a lot of problems out there that are waiting to cause issues. For example, the LIBOR rates are starting to explode, and that could make debt financing a serious problem. It’s possible that the market is like a bug looking for a windshield, meaning that every time there is a little bit of bad news we will probably find reasons for sellers to get aggressive. In general, this is a market that I think continues to be very jittery, so it’s difficult to be flat-out bullish, and at this point I would suggest that a trading position that you take should be very small. Even if we break above the top of the range for the day, I would still be somewhat cautious.