Via Stewie
If you enjoy the content at iBankCoin, please follow us on Twitter“I cannot help but notice how little concern I am seeing on the behalf of the bulls at the moment. This makes me think that we are only at the beginning stages of this decline, not the ending stages.
If this decline ends up being a 3rd wave down, then this decline could be very long and painful and will burn a lot of ‘buy the dip’ traders. it’s better to trade with the down trend and use rallies to reposition shorts. notice the VIX barely moved up today even given the massacre in equities. that spells complacency.”
My thoughts exactly. I just think there’ll be a relief rally soon, at least in the financials. I’m hoping for another shot at some of the midwestern fatty’s that have already faded without my participation (MI & PNC to name two).
Rage, I know you love midwestern fatties, so don’t deny.
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From EW Lives On:
The strong market rally on thursday was a bit of surprise, as we had noted that we expected a strong selloff thursday/friday. On friday we got that selloff, and several more indices confirmed downtrends. The bear market counter-trend rally from March at SPX 1257 to May at 1440 is complete. Next we should look for a selling climax some time this month near the previous lows. Repeating the observations posted over the past few weeks. The first major decline from the bull market high at 1576, was five waves, took five months, and dropped about 320 points to 1257. The recent two month rally was about 180 points to SPX 1440, better than a 50% retracement. Since the first five wave decline reversed waves every month (Nov-Dec-Jan-Feb-Mar), then the second five wave decline is likely to do the same (Jun-July-Aug-Sept-Oct). This would complete a Primary wave from the bull market high. When examining the first 5 wave decline we find some symmetry. Waves 2 and 4 were exactly 120 points, waves 1 and 5 were somewhat equal (170 and 140), and wave 3 was the longest at 250 points. Since we anticipate that this downtrend is wave 1, and if it equals the first wave 1 (170 points). Then we would expect a low some time this month near the previous lows between SPX 1257-1270. There is also an OEW pivot right at SPX 1261. With a friday close at 1361, this downtrend appears almost halfway done.
Short term momentum remains oversold. But the near term indicators are not sufficiently oversold to signal the end of wave 3. As projected over the weekend wave 3, of this downtrend, should end around the 1316 OEW pivot; SPX 1440: 1373-1406-1316-1344-1261. The market appears in wave v of 3 now.
Observation: This is only the second major leg down expected to reach the March lows by the end of the month so the 3rd major leg down could bottom around 800-850 (SPX) sometime next spring … say March (???)
Alias
The VIX rules at this point. Also no program trading rebound at 12:00. I will not buy this bottom until I see a rebound and a reason. Markets tend to make new lows during no reason periods.