Monday, February 14, 2011

5 Waves Completed? - Correction coming in the next couple of days

We got the higher high today as expected but the market opened in a W4 so I think the higher high came in today in a W5 so this might be it for this particular leg. Ideally, the leg should have come closer to 1340 but the pattern is looking like a Rising Wedge (just like the one from last week) and there was a roll over on the MACD. If tomorrow we get a down day, it will confirm a bearish divergence between the MACD and the market which builds the case for a correction of a higher degree coming very soon. I went ahead and got back 100% of the shorts I covered at 1316 last week at 1332 towards the end of the day. So we'll see if the coming correction is another test of the rising trend or a real corrective sell off for the wave that started in late November (or August for that matter).

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