Tuesday, August 19, 2008

August 19, 2008; Wave 3 of (3) is Underway

Looks like my analysis over the weekend proved correct (see previous post below). Yesterday NYSE breadth had decliners exceeding advancers by about 2.5:1 and down volume was about 83% of total volume. Today in early trading (10:20am EST), breadth is similar and the Dow is down over 100 points already. This follow-through into today is encouraging. Barring a huge rally that puts the Dow up triple digits by the end of the day, this market is going to get destroyed over the next few weeks/months. On top of what I mentioned above, both the S&P and Dow closed slightly beneath their trendlines I spoke about the other day. This is the market telling us that the uptrend is over, and lower levels will be achieved. But these aren't just "lower levels" as usual, this is the big daddy of declines getting underway. We know what the bigger impact of those lower levels will be. It's a big daddy wave 3 of (3) down that will destroy the markets in the coming weeks/months. There should be little let up at all. It should be constant down days with numerous triple digit losses weekly. It should shave at least 2500 points off the Dow, but quite possible will shave off 4000 from the around 11,800 in a very short period of time.

I sold my protective put options and am now fully invested in shorting all three of the major indices (Dow, S&P and Nasdaq 100).

This should be one wild ride.

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