Thursday, June 18, 2009
Probably Small Short Term Rally, Then More Declines; June 18, 2009
The mainstream media (mainly CNBC folks) are way to short term bearish right now to get me to fully dive right into the short side now. So many CNBC anaylsts and articles online are talking about a "short term pullback" that it has me very cautious about the market declining right now. The wave structure still leaves the door open for more time to elapse and higher prices before the next leg down. I am still very bearish in the next few weeks, but I think we need another "pop" rally to get rid of some of those mainstream bearish attitudes in order for the next leg down to get started. Tomorrow is a Friday which is typically a slow day so it's possible we just drift higher all day tomorrow. If not, I expect a sharp ferocious rally that will suck all those short term bears into the market to go long which will lead to a top and reversal. Whatever the method, I still feel we will climb a bit higher in the very near term here.
My chart above of the 15min S&P cash index shows my projection for the market where it rallies just above the prior 4th wave (typical in EWP) to the 50% fibonacci retracement level at a nice round number of 930. There's no requirement for the market to get there of course, it's just my best guess as to what I need to prepare for. I'm about 50% short right now and will increase to 75% short as the market works higher.
The bottom line is that the market is in a decline phase that should take the S&P to the 875-880 area before even considering a bottom. But in the very short term, a rally to the 930 is quite possible.