Cuts Like a Knife

Driving home this evening
Could have sworn we had it all worked out
You had this boy believing
Way beyond a shadow of a doubt
--Bryan Adams

Domestic equity markets down ~2% today. Unlike recent history that has seen dip buyers emerge late in the day to ramp 'em, indexes drained today to close on the lows.

Haven't seen a -2% day since last June. SPX knifed thru the 50 day moving avg with authority but as the chart indicates, previous excursions below the 50 day have been quite temporary.

Hard to read much into the recent action given all the head fakes lower over the past year or so. It does feel like the bulls were caught offsides to start 2014.

Sentiment remains optimistic. Even the bears are looking for a rally--one that they hope that will be of the 'failing' variety. Most bears are pessimistic in words only, however. Few are actually short in any significant size. They are hoping for that failing rally to provide a nice entry point.

Technical levels of lore below include SPX 1780ish (near term support), 1740ish (multi-month uptrend, and 1700ish (200 day moving avg).

The SPX last touched its 200 day 14 months ago while marking 'Thanksgiving lows' in November, 2012.

position in SPX