Tuesday, March 1, 2011

C Wave or 3 Wave?

The market respected the 1333 level I mentioned yesterday by coming up as high as 1132 but it finally sold off as I had been speculating since the counter rally began last Tuesday. Now the question is whether this is a C wave or a 3 wave. If it is a C wave, then we will see another 1350+ high before starting "the" correction. However, if 1280 does not hold then I'd expect the 1227 level to be tested by the end of these 5 waves down. I suspect the market will find support at 1280 but if it does not impulse back up then the market will keep on making lower lows and take some of the blind optimism that had (and still somewhat is) been prevalent in the market. The catalyst for today's sell off was oil moving up couple of dollars. However, it seems like most people who were buying in the last couple of days completely forgot oil was at $85 just 10 days ago ($15 less!) when I mentioned the Middle East as a sell off catalyst. The bottom line is that
the Middle East is chaotic and Saudi Arabia has protests on the horizon. And I find it interesting no American media outlet has mentioned the "Day of Rage" scheduled on March 11th in Saudi Arabia. I think the best move for traders is to be in cash or short at this point until the trend changes again.

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