Monday, December 29, 2008

Declining in 5 Waves Now = Downtrend Has Resumed; Dec. 29, 2008

The market has now declined twice in 5 waves in all the major indices. The evidence continues to point towards immediate market weakness instead of any strong rally occurring first. Above is the S&P 15min futures chart that shows a 5 wave decline, then a fibonacci 78% retracement, then another 5 wave decline. This tells us the trend is now down.

The next level the S&P futures needs to break to strengthen the bearish view is 852, and in the cash S&P it's 857 and 851. A break of those levels in both the futures and cash markets will confirm that a strong declining phase is back underway that should take the S&P to AT LEAST the 750 area.


Michael K. said...

Ouch. Thanks Todd for the analysis.

Michael K. said...

Hey Todd, are you going to invest in 3X ETFs like FAZ and TZA? you can double your money if the S&P 500 drop straight(no rally in between) from 850 to 750.

Todd S said...

Probably not now. I use double short ETFs like DXD, SDS and QID. I won't go heavier until the market structure is more clear, and perhaps a large 3rd wave is about to get underway with a clear risk/stop level.