Tuesday, December 2, 2008
After Correction, Another Sell Off; Dec. 2, 2008
Well if an A-B-C correction is taking place, like projected in my chart below, then the wave B went much deeper than expected. But that's ok, it could be a "flat correction". This means a slight new high above wave A and then the market will roll over to new lows on the week.
I posted a 15min chart of the Nasdaq 100. It tends to be a good leading indicator of what's going on the overall market. This index is the only one that traced out a clear 5 wave drop yesterday (see above chart). With that huge selling pressure yesterday, I expect some follow through soon. We didn't get it today, and the choppy nature of the rally today tells me this is just a correction, and the continuation of selling pressure should resume soon, like sometime tomorrow.
As long as the Nasdaq 100 stays below the beginning of wave 1 (see red horizontal line on chart above), then the market is short term bearish.