Talk of tapering by the Fed talking heads on Monday caused a selloff on Tuesday morning. If the Fed is serious about QE tapering that would be the impetus for the sell-off that should last for one year, until September 22014.
The sell-off should be fast and furious, more akin to a crash, as most traders and investors are currently mostly long with very high leverage, and any contraction in the money supply as a result of the Fed tapering their QE would cause massive longs liquidations that can get out of control.
We shall see if the Fed's talking head would change their mind again. If not, the sell-off have have just begun.
Key Level for Wednesday is 3030, prior support now-resistance.
-- Bearish below 3130, but it would need to break below 3110 to trigger another round of sharp sell-off.
-- The short would start to cover above 3130, next upside target is a break above Monday's swing high.
