Major Decline Phase Underway; Jan. 9, 2009

I'm quite certain the next major decline phase is underway and the S&P's cash high of 943 should not be exceeded before 2008's low of 740 is broken first. But most likely it won't be an easy road to get there. Normally when there are major tops and then a decline, the masses are in denial that a top is in so they soon fiercely buy up the decline. This is what wave 2 psychology is made up of. But the rally does not make a new high and the bulls give up which gives way to a wave 3 down. We've lost over 50 S&P points so far so a sharp corrective rally is possible, but not required.

Bottom line: the next major decline phase is underway that should take the S&P below 740 before any significant bottom is formed.