Monday, September 21, 2009
Today's Early 5 Wave Drop, so Far Just Part of ABC Correction; September 21, 2009
Today the market dropped in a clear 5 waves right at the open, but has since rallied hard and the Nasdaq (higher risk index) is leading the way higher and is in positive territory as I'm writing this. As you can see, the above chart labels the decline starting from last week as an ABC correction, with this morning's 5 wave drop being wave C. So as it stands now, as long as the S&P trades above 1057 then the decline should be considered corrective, and new highs will follow. IF the S&P breaks below 1057 then it will signal that possibly something bigger is occurring. The EUR/USD has appeared to have formed a top, or is real close, and China's index continues to selloff sharply with it down over 3% on Friday and did not recover today. I'll assess the bigger picture when 1057 is broken.
In summary: the stock market is bullish as long as the S&P stays above 1057. A break below 1057 may signal that a larger decline is underway and I'll assess at the time to try and determine the magnitude.