Todays Sell-off - the telegraph

In my opinion, todays broad market weakness was given away early by the canary in the coal mine - financials. If you look at intraday charts of any of the major banks - JPM C WFC BAC - they all look like the XLF chart below. A gap up opening (for the 2nd day in a row) and an early reversal on very heavy volume. Once this was in place it was time to short the broad market - SPY, financials, etc - and ride it lower, always keeping new highs as an ultimate stop area or a trailing stop as price collapsed.

Another psychological sign that a gap up today should have been faded was the "hope" trade - that The Bernank would say something enlightening about QE3. But as most of us know the saying "buy the rumor sell the news" selling the gap up opening in anticipation of that hope waning into the meeting and for the rest of the day was as good as selling "the news" to me. And if it didn't work out a tight stop just over the opening highs would have been the way to protect yourself.

Always, repeat ALWAYS, have your stop level known before you put on a trade...and NEVER adjust your stop to a worse (more money losing) price. When you're wrong you're wrong and its best just to admit it as soon as possible and move on.

Anyway, this weakness was telegraphed by the above...tomorrow is another story. Given the late day trashing I would expect a continuation in the same direction - that is, lower. As for areas of interest for the buyers to step in, take a look at 38% and 61% Fibonacci retracement levels on whatever stocks, ETFs, or indices you are interested in.