Monday, August 16, 2010
Five Waves Down Can Now be Counted with Confidence; Possible Correction Underway
The S&P plunged to a new low this morning fulfilling the forecast of one more new low to complete a nice 5 wave decline satisfying EWP's guideline for the "right look". The market then snapped back into positive territory with the Nasdaq leading the way as it's showing much more strength today relative to the other major indices. Also, the VIX is down about 1% at the time of writing, so it seems that fear is slowly leaving the market, and the new low this morning did not create a new low in the RSI creating a bullish divergence I discussed last week; all this is supportive a 5th wave that just finished up and a correction upward occurring.
I'm not sure how long or high this correction will be, but if I was playing the medium to long term on the short side I wouldn't touch a position at all. But if I were trading the very short term, I'd consider taking some profits made on short positions and then re-enter on any rallies.
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.