Monday, May 14, 2012

About to counter rally

The market not only tested 1343 as I had been speculating last week, it managed to close below it. And now that this new lower low is in, the odds favor a stronger counter rally. The last few times the market tried to bounce it failed miserably but now that we have corrected to the Fib retracement area of the wave that started at 1202 in December, I favor a W2 starting in the next couple of sessions. The low today came in exactly at the 38.2% of the rally from 1202 but I'd be surprised if the market does not make lower lows after the bounce. I continue to favor a test of the 200 day MA eventually so we'll see how low it takes to get there.

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