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Mercury turns station direct tomorrow just before the New York open.

Another whipsaw in the component of a certain little indicator putting the eventual denouement off……………. when the negative levels of the last few weeks should be exceeded. (Firepower for 2 big down days at least)

Tomorrow is another 26 day…..

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Time for them to drop it below the lower BB again tomorrow. I don’t see a final washout until the 200 day average is breached. Should march lower now that 50 day has been breached. All significant corrections head to the 200 day average. And so far this has been a significants correction. Number of stocks above the 50 day average are indicating that.

... Red Dragon Leo

I think we have an ABC (larger wave 4) up pattern in play now with the A wave about to top here soon with the B wave down to happen into today’s close or at the open on Wednesday. Then a C wave up to around 1620 around for the gap window to complete the larger wave 4 up. After that I expect the larger wave 5 down to start and head toward 1525 spx area.

http://screencast.com/t/LqYhFVQj

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Well, today the market managed to replicate the action from 5-5 from 3 years ago. Drops to an intraday low, then rallies most of the rest of the day to new intraday highs, then falls at the end closing in the middle of the daily trading range, all in the red. the $tsx bar captures this the best, but the Nasdaq one is good also. $nymo was in a similar area.

A component of a certain little indicator dropped to the extreme negative levels of the previous few weeks. Another down day like today or worse will have it challengeing its all time negative extremes.

Most of the indices still managed to tag their lower BBs so we still need a comlete bar beneath the lower BB for a final washout. Trin had a mild reading.

... Red Dragon Leo

Hmmm…. at this point we could have already had all the downside for now and could be making that bounce back up to the 1620 area as I suggested in this post. Hard too say right now as I’m still thinking we are going to hit the 1525 area before a multi-week rally.

But for now I’d like to just wait and watch to see at least a 3 wave pattern (ABC) move up before thinking of shorting again. If the move off the low was the A wave up then there should be a B wave down tomorrow or into the close today that puts in a higher low and allows for a C wave toward that 1620 to complete this rally. Then I’d think about shorting again.

... Red Dragon Leo

Pretty strong bounce going on right now so I wouldn’t go short at this point. Let’s see where it goes first.