Wednesday, February 18, 2009

Market About to Make Big Move; Feb. 18, 2009

The market internals suggest a huge move coming most likely Thursday. The market closed flat today but the Dow was up with the S&P and Nasdaq Comp. down as well as the NYSE. NYSE breadth was negative with more than 2-1 decliners to advancers. Various indices and sectors were up and down today illustrating an unstable and fractured market. Usually when this occurs, the market moves violently the next day. My wave count above suggests that-that move will be to the downside. However, in case I'm wrong, I want tight stops on up to half my position to protect myself from a violent temporary rally. I plan to start stopping out my positions on a solid break of 802 in the S&P. Most likely if the market is going to move violently to the upside then it will probably be due to some kind of news event. So I'll be watching for news releases out early in the morning and watching the markets' reaction to that news. If nothing comes out, and the the markets tank, then the next heavy downward selling phase should be underway.

Bottom line: a violent stock market move should occur tomorrow, either up or down, so I'm prepared to protect myself to the upside and profit big on the downside.


Michael K. said...

Do you think the s&p might rise to 829 before the next big fall? 61.8% Retracement from 875 to 754.

Todd S said...

No, that's too deep of a correction at this point in the game. If the market continues this rally into the 770-800 area I'll re-short it. If it strongly closes above 800 I would not be comfortable re-shorting at all.