Monday, April 18, 2011

W2 counter rally

The downtrend resumed today in full force as I assumed on Friday's post and we now seem to be on a W2 counter rally(although there is also the possibility of a W5 leg down to 1288-1293 coming tomorrow before the W2 counter rally). Technically the market could continue the sell off tomorrow in a W3 as the rally has already done a proper Fib retracement. But since we have a bullish MACD cross, I think it has a good chance of bouncing to resistance at 1316 and then resume the sell off in a strong bearish wave. The short trend started turning bearish last Monday and now the intermediate trend is also turning bearish. I set my buy trigger to play the W2 bounce at 1293 but unfortunately the market made it only to 1294 (I am stingy when it comes to buying and my stop losses). So I'll see if I can catch the market on the next bearish wave which should be coming in the next couple of days.

Interesting how the market sold off on the S&P downgrade, as if this debt problem was somehow "news". If the US was a person, the level of debt and deficit spending would equal to a person that nets $100,000 owing $1,000,000 to creditors while continuing to spend $170,000 per year. Doesn't take a genius to figure out there is a big problem but as long as people buy our debt, we'll just keep printing our way out.


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