Tuesday, August 12, 2008
August 12, 2008; Nothing New After Today
Nothing new to really add from my earlier post. I'm not at all convinced that wave 3 of (3) has started. 72% of total volume on the NYSE was to the downside today, which was pretty bearish, but decliners outpaced advancers only 1.9:1, which is nothing stellar. A wave 3 of (3) down should consist of over 90% of NYSE volume being to the downside, and decliners outpacing advancers by at least 3:1 for the majority of the wave down. This just looks like a correction before another test of the highs.
However I don't think this little downward correction is over. Today's decline formed a bearish engulfing candlestick on the daily chart (see top chart, circled area). Also, yesterday's decline late in the trading day formed a large wick at the top of the candlestick (see arrow on top chart). Both of these are bearish candlestick formations suggesting further losses tomorrow. Also, it appears this current correction is unfolding in wave C right now and it's not quite complete (see bottom 5 minute chart where it needs to fall to a new low in a wave 5 to complete C and then resume the rally). So I expect further weakness tomorrow before any short term bottom forms and the rally resumes.
This is all short term analysis and speculation on my part. It just seems the trend is still up for now. But eventually it will roll over in a huge decline in wave 3 of (3).