Tuesday, September 1, 2009
Wave 3 is Likely Underway, the Modern Day Financial Dark Ages are Here; September 1, 2009
Today was a horrible day for the market as good ISM and employment data came out yet the market sold off sharply in reaction to it. On top of that, NYSE had declining stocks outpace advancing stocks by almost 5-1 and almost 95% of all volume today was the to the downside. And speaking of volume, today's selloff was on monster volume. The selloff also confirms the momentum indicators' (MACD, RSI and stochastics) bearish divergence with today's weak close.
All this suggest a severe exhaustion to the wave 2 rally and a high demand to sell stocks, even on a good news day! Most likely the big wave 3 crash into a modern day depression is now underway.
My initial target for the S&P is to break 450 before the end of 2010, but it can possibly go much much lower. I am fully invested in put options on the SLV, SPY, QQQQ, IWM and XLF with most expirations occuring Jan of 2011 which gives plenty of time for the market to collapse.