Tuesday, December 2, 2008
Correction Underway; Dec. 2, 2008
With the very strong decline yesterday and momentum and candlestick indicators pointing to lower levels, I expect to see some follow-through soon. Today's correction has already traced out what appears to be a 5 wave rally (see above chart), so after a brief correction it's possible another rally will occur to complete the whole correction. This correction today is healthy for the downward move. The market dropped 9% yesterday and if it immediately continued this morning it would reach an oversold level and I'd close most or all of my short positions. The fact that it's rallying and alleviating the downward pressure probably means a bigger drop will come soon, probably well below 800 in the S&P.