Monday, February 7, 2011

S&P to 1330?

The pattern I was betting on was broken by the gap today by what I see as a W3 of a W5. So we either topped on this leg today or we are still working on the W4 of this W5. So I went ahead and shorted the remaining 25% at 1320 and will just wait for the correction to see what we get. If we get a zig zag correction to the 1310 area then we will see a launch of yet another W5 to possibly 1330. But if we get an impulsive down day to test the trend average (currently at 1301) then it will be a correction of a higher degree (like an "A" or a bearish "W1"). I will cover on anything less than impulsive as this market just wants to keep going up and up. Right now bears want a pullback to cover and bulls want a pullback to buy at prices, so it's hard to see who keeps on buying. This period reminds me of the month in 2000 when the NASDAQ went from 4000 to 5000 in one month, people were going crazy buying and chasing the market and there were talks about DOW 35000 by 2010 (Remember "The roaring 2000's by Harry Dent", who btw recently switched to predicting DOW 4000). 10 years later and we've basically gone down/nowhere. Blind optimism has a price.

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