The Sideways Minor Wave 4 Takes Hold; Euro Set to Breakout Soon

Internals calming down a bit today relative to the last few major triple digit moves we've seen the past couple weeks.  Volume was still very high overall though at 2.14 billion shares.  Of that volume, 93.5% was to the downside.  Overall, again a very bearish day.  My guess is that margin calls are hitting traders and fund managers' desks forcing the large selling of their assets, which in turn facilitates further margin calls and more forced selling.  Then speculators are jumping on board and riding the short term trends, magnifying the impact of these moves.  So we get these wild swings on huge volume.  As far as price structure and internals go, this market looks ugly and in severe trouble.  Somebody  better do something "magical" to calm the markets down at least short term or this thing will continue to fall off a cliff in the coming days.  Things are bad.

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I'm still thinking that Minor wave 4 is underway which should lead to a see-sawing up and down with very little overall net gain or loss over the next week or so.  This is highly speculative on my part since the market can easily just plummet lower at any time and I'm trying to give wave labels to basically a straight line down.  Yesterday we had about a 450 Dow rally and today we had about a 530 Dow decline, but no new low.  So wave 4's choppy sideways move is off in typical fashion.  I would not get long this market at all, I'd simply be looking for rallies to short into.  This market remains bearish overall.

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The financial sector has finally broken down.  I have said this a couple times in the past couple years as the $14 level was taken out, but was wrong on both accounts obviously.  I feel more confident in calling it a breakdown now that it's in the lower $12 range now.  Financials are the backbone of our economy.  We have to borrow money to buy or do almost anything in this country, i.e. buy a car, house, go on vacation.  So if financials are breaking down this severely as seen from the above weekly chart, it shows you how much trouble our economy and stocks are in right now.

Nothing new here for the euro as the bears and bulls keep exchanging blows in a truly consolidative pattern.  The bears have a slight edge here in my view though since there is a series of lower lows and lower highs in place, suggesting the making of a larger downtrend is at hand.  But with no clear EWP count on the bearish side, it keeps me honest and cautious of getting too aggressively short.  The euro is due to breakout from its consolidation at any moment, and the weight of evidence slightly favors the breakout being to the downside.

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.