We have been noting that the headliners, SPX, NDX and Dow have clung to or above their 2014/2015 lows and that much of the rest of the market is in a bear.  Today SPX bounced to over 1900 and is now back at 1871, which is the testing area.

spx daily chart

The problem is that other indexes are flat out bearish, having already broken support.

Bank Index targets much lower, as noted in the weekend report.

bkx daily chart

Russell 2000 does as well.

rut daily chart

HUI Gold Bugs might seem like an odd entry here, but recall in 2008 that it was already diving impulsively when the broad market finally also received the bear memo.  If this breakdown holds, might we finally see a replay?  In Q4 2008 the miners crashed and bottomed while the stock market still had lower to go.

hui daily chartHere is a public post from this morning that fine tunes the HUI situation, with the monthly targeting support in the 70’s and the daily pattern above, measuring to the 60’s.

Bottom Line

A bounce came, it was strong in pre-market and it lasted about as long as it took for some pathetic China hype to wear off.  If SPX does not hold current levels, and in consideration of the leader indexes’ bearish state, a crash scenario is on the table.  I try not to speak to you in alarming tones because I hate it when people do that; get other people all riled up.  But we should all be well prepared.  SPX bulls have no more room.

I still hold SPY long, but also shorted the Banks (KBE) to go along with shorts on GS and Emerging Markets and even a little protective nibble on JDST for the few miner positions I hold.  As always, cash is the best position for most people until the dust settles, and it will settle.  It’s either bounce from this area or the bear scenario goes from stealth to in everyone’s face.