The scenario from Jan 17th remains the same:  A relatively minor bounce off the T1 area (defined as a relatively tight support zone here), followed by a move down to the T2 area (174.60-175).  Keep in mind that AAPL (Apple) will report earnings after the markets close today, which will almost certainly cause some initial volatility in the after-hours session and into tomorrow’s trading.  I could see the market possibly hitting the T1 area today & then bouncing into the close, on expectations of a blow-out quarter from AAPL.  I could also see a close at or near the T1 level with the markets gapping higher on Apple’s results only for the rally to get sold into tomorrow or Wednesday.

Regardless of the reaction to AAPL, my money remains on any bounce off the T1 level being relatively short-lived in both scope and duration with the markets continuing lower to at least my T2 level before any substantial bounce. However, until the T1 level support is clearly broken, I would be very selective in adding any additional or new short exposure.   With the market now just above support & volatility likely to follow in the wake of the AAPL earnings report, it might be prudent to sit tight & wait to see what happens with Apple tonight as well as how the market follows through in the first hour or so of trading tomorrow before adding much new exposure, long or short.  Here’s the updated 2 hour SPY chart along with the previous 2 hour charts for reference.  Best of luck in your trading.  -RP