Options play: The E-mini S&P 500 finally has a healthy correction. The question now is, how much of a correction could we be looking at?
Fundamentally, CBS's Marketwatch.com summed it up best for me here in an article from today, "The U.S. stock investors turned skittish on Tuesday driving major averages to their lowest levels in months. A jarring trading day follows a series of tough weeks in stocks marked by precipitous declines, which have left the S&P 500 sitting 3.8% lower from its peak reached just three weeks ago on September 8."
For a bear like me this is awesome as they use words like "skittish", "jarring" and "precipitous" when it comes to this E-mini S&P 500 correction. Hey, some analyst I heard on CNBC said a 10% correction could be in the near future. I don't know for sure, but I like what I see.
December E-mini S&P 400 chart, daily
Technically, on the chart above I have placed my favorite technical indicators. They are the 9-day Simple Moving Average (SMA, red line), the 20-day SMA (green line), and the 50-day SMA (blue line). I have also added the Bollinger Bands (BB's, yellow lines) and Candlesticks (red and green bars), each bar represents one day of trading on this daily chart. I have also placed a bright white arrow line pointing lower indicating a long trend line of resistance that is holding.