Equities were weak overnight in Asia and Europe and we are likely to see continued pressure here when the U.S. opens in less than an hour down already 7 points in the S&P 500.

Some comments from John Noyce at Goldman Sachs are worth noting:

"Given yesterday’s key technical break of the 200dma in the S&P (the first time the market has closed substantially below since 17th July '09), here is a quick comment from John Noyce: “Although not historically so reliable, over the past year the 200-dma has become a major focus on a lot of different markets, so I would take this as a significant signal. Psychologically the prior low from 6th May also looks very important (1,069.31). The move to that level on the 6th May has generally been written off as a "system problem" rather than real price action, to now take it out, as clearly looks the risk, would likely worry the market significantly. Next support the 5th February low at 1,044.89."

Source: John Noyce - Goldman Sachs

I am very interested in USD/CHF as it remains quite firm overnight on the heels of being quite strong during yesterday's DXC sell-off. If we assume that Wave 4 is in place - then presumably a rebound in DXC should allow for a nice pop higher in USD/CHF. I would be inclined to be a buyer above 1.1590 and for clients comfortable taking on a piece now, go ahead and do so with stops under 1.1440

For some perspective (from someone who actually is worth listening to), take a look at this article on Bloomberg

I got the following email from a client yesterday afternoon:

"Hi Dave,

To me, this market doesn't make any sense. The VIX is at 44, S&P is down 32, the 10 yr is at 3.233, and the dollar index which consequently should be up is down.

Mark"

Mark, you are correct, viewing the market from the framework that most traders have been applying in recent months - it does not make sense. The market is an ever evolving entity that will always force traders to THINK (imagine that!) and adapt. This is the reason these scams that try to sell you a trading model or worse a BOT will never work for an extended period - but I digress.

This is why trading is such a fascinating game and why I believe deeply in inter-market analysis. When you can begin to connect the dots and notice that the correlations are changing, that is when you gain an upper hand as a trader - you have begun to piece together the new framework for how the market will trade going forward. However, there are also times when you simply need to stand aside because you cannot draw any conclusions that seem to work - this is OK too. There is no need to trade every move or everyday.

As noted in Market Wizards - 'The lion does not simply seek out the weakest gazelle in the herd, it seeks out the one who is sick or perhaps lame - then and only then does the lion attack with the greatest chance of a kill - that is the epitome of a great trader.'

For more from Dave, visit Aspen Trading for more updates.