Thursday, May 20, 2010
Market in Wave 3 and Various Degrees, Still More Downside to Come
Above are the internals showing the insanely bearish foundation of the market move today. Volume as a whole was huge on a big down move which is basically bearish in and of itself, down volume represented 98.6% of total volume, and 18.6 stocks were down for every 1 stock up, and the S&P only had 3 stock advancing. So it was a broad based 'sell everything' decline today. This is textbook EWP wave 3 internal structure. It also means that further declines are to come. Tomorrow is options expiration day so it could be another wild day. Today's late day selling and the financial news in panic mode right now, I can see a sharp decline tomorrow morning and then perhaps a rally to end the day. But this absolutely no time to get cute on trying to catch bottoms in my opinion. If anything I would be ready to where if there is a bounce higher, it might be an opportunity to sell into it. All my key levels I've mentioned over the past week have bee destroyed so I think this market is headed lower....much lower. The evidence that wave  or C is underway is very high right now. I'm looking to sell into any significant rally the comes about, but most likely that means I'll be waiting for wave (1) to end and will get short on the big wave (2) once it gets underway.
Above is a cleaned up chart with proper degrees of waves I feel are likely at the present time. This also fits in with my guess that tomorrow will give us a sharp selloff early and perhaps a rally at the end of the day since this count has us in a wave 'v' of '(iii)' of 3. So wave 'v' may shoot down tomorrow and lead to a somewhat muted or flat correction for wave (iv). This is merely a guess and in no way am I taking an short positions off the table in preparation for that, and I'm definitely not getting long this market at any time. All it means is that I'm ready and prepared for the volatility coming.
The market should be heading lower and I'd only be looking for short entries.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.