Wednesday, August 25, 2010
Market Trend Remains Down
Note: I'm on a bit of a summer relaxication until later next week so posts will be brief and to the point.
Today the market tanked lower in the morning on the heels of the horrible housing data. But then floated higher most of the day until the last 30 minutes. The bad housing data along with the large amount of pessimism in the financial media (see above CNBC screenshot) have me thinking a short term bottom might be either at hand, or close. So for the real aggressive short term traders, I'd have my ear close to the ground tomorrow and the rest of the week for minor bottom to form. But as you'll see from the wave count I have below, the market can easily keep falling and falling, so getting bullish is something I would definitely not do, and I would not remove all my short positions just in case the market just continues lower and lower. But for some of my short term trades, I often take profits when I get them. So the medium and long term players shouldn't even be concerned with these possible short term bottoms until key levels are broken, which right now is at 1100.14. Hopefully I'll be able to lower this key level soon, but right now we still need some waves to unfold to complete a larger 5 wave pattern from the highs before that's comfortably possible.
Above is the wave count which appears incomplete. The first part of the decline is clear. But the recent waves look like impulse moves, but can be labeled in several different waves. So I don't want to get too caught up in the little details of each smaller wave since we might be in a 3rd wave at various degrees and unrelenting selling for a long period of time may be upon us. As the wave structure unfolds and rallies get bigger I will be able to be more certain of the smaller waves in this pattern. But as long as the market keeps making lower lows and lower highs, the trend is firmly down and worrying about the little waves right now is not of a high priority right now. As soon as the structure becomes more definitive, I'll post my outlook on it.
So despite being on guard for a short term bottom possibly forming, I'm still overall firmly bearish for the medium/long term, and am looking for good opportunities (like rallies) to add to my shorts when they arise.
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.