Major averages fell on Friday, plumbing new depths on higher volume that was well above average. The first options expiration of the New Year lent to some of the volume increase. Oil and junk bonds slid yet again. The oversold state of the market continues to confound investors, but markets can fall far further than expected at the least likely times.
On the other hand, the put-call spiked to its highest level seen since September 28, 2015 when the markets found their lows the next day. We have also seen short-sale targets hit logical downside price objectives. TSLA undercut its 195 low of August 24th, while NFLX has found support at its 200-day moving average putting it in a position to take short-sale profits before it announces earnings after-hours today. AAPL is still hovering above its 92 low from August 24th, and the 100 price target should serve as a reasonable trailing stop for any position taken higher up in the pattern per our earlier discussions of the stock. The bottom line is that the market and many beaten-down former leaders are deep down in their patterns and in a logical position from which to attempt at least a short-term rally.
Futures are spiking higher by about 1.5% at the time of this writing as China reported the slowest economic growth in 25 years leading analysts to believe China will ramp up its monetary stimulus program to spur growth. Alternatively, the Chinese central bank may also devalue the yuan once again which could put downward pressure on its markets as it did recently.