It was a nasty day for the market as all three major indexes took a major blow by falling an average of 3%. A wave of bad news hit Wall Street like a tsunami as oil topped the $140 level and could ultimately be the straw that breaks the market’s back. The Dow lost a whopping 358 points to finish at 11,453. The Nasdaq fell nearly 80 points and closed at 2,321. The S&P skidded 38 points and ended the session at 1,283.

Three weeks ago I mentioned if the Dow fell below 12,000 it could lead to a test of 11,750 and if that was broken, we could fall even further. Here we are. I said the S&P 500 would need to fall to 1,325 then 1,275 for the bears to start coming out in force. Here they are on the doorstep. For the Nasdaq I mentioned 2,375 was support followed by 2,275. As you can see, the Nasdaq could be a train wreck waiting to happen.

If you are a regular reader of the blog, you will know that I’ve been bearish for quite some time. There are a few stocks and sectors that have done well over the past few months and it has clearly been a task to find stocks that are going up when everything is sinking. However, people are making money by being short the market. There aren’t many stocks or sectors that look good right now to go long now, except maybe gold, but there will be.

A lot of stocks have been punished to the point to where they look not cheap but “dirt” cheap. There will come a time when it will be worthwhile to start thinking about going long and LEAP call options could provide us with an excellent chance of making some big money. But not yet. July will be a pivitol month for the market and you can bet there will be plenty of fireworks.

Rick Rouse