IMO no new highs (except Nas, obviously). Recent action actually struck me as bearish - no capitulation, instead a bounce that was enough to work off the oversold conditions and bring in new longs. If the S&P is going to puke 100-150 points, then it is going to do it as a grind. Any major selloff will spike the VIX, cause panic selling, and thus put in a bottom. So to go a *lot* lower, a grind is needed, along with plenty of moderate sucker rallies and go-nowhere periods (these will also make shorting tricky).
A while ago I proposed that we might be in an extended trading range in the S&P, from 1370-1570ish. Monday & Tuesday's action fit perfectly into that, along with the recent selloff after the fakeout high around 1575. So I would expect maybe a 50% retracement of the recent selloff. That indicates a move back to around 1530-1540.
So if the market rallies to there, pauses, then starts selling off and moves back below 1500, that'll confirm my view, and I would expect a choppy grind down to the low 1400s followed by a quick panic down to the old lows (probably a tad lower to freak people out). If the S&P moves beyond 1550 for more than a day or two, I would have to reassess my position.
That suggests that buying puts when the S&P goes 1525-1535 would be the best bet.
