Friday, May 31, 2013

More downside ahead

Now that May is over and a significant top has been confirmed, I think the market will be headed to the revised area I mentioned yesterday for the C wavewhich I forgot to add coincides with the 1580 "ideal" target for the LT Int W4. How long it will take for the correction to end it's anyone's guess as I am more concerned with price. However, I first started warning about a significant top 2 weeks ago (the first time this year I called for one I might add) when the naive 5th wave crowd were buying like mad and I wrote the following:

The Cup and Handle target was met today and the market is now at the upper end of the revised target range ( I should add that 1685 is 1.618 of Int W1 so an extension is very possible). I am looking at couple of levels for support and they are 1636 and the 1623-26 area. Which level ends up holding will probably give us clues as to how this correction will evolve. The less severe the initial correction, the higher the chances of a zig zag or double zig zag. But if we get one big sell off to the 1585-1597 area then I will favor a triangle. Also, I expect the Int W4 correction to take some time to work off the overbought conditions (and make no mistake the market is very overbought at this point). 

So if we get to the target in the next week or so then I will be looking for a triangle as possibility for the LT Int W4 correction. Obviously the market is free to start the LT Int W5 once the target is reached but I think the market needs an oversold base to start a nice rally. When all those bearish "experts" start ringing alarming bells that's probably going to be the bottom of the correction.. so be on the look out for Marc Faber, Roubini and Pretcher.. lol.

I had a very nice VXX day today and I think made enough for a vacation and coffee too. However, my plan was to sell half at the close to lock in some profit but because I was in a rush to go meet a friend for lunch, I closed the position 3-4 minutes before the close around 1636-37 and missed out on a good chunk of profit since the market dropped 7 points in the last 3 minutes. But profit is still profit plus I still hold the other half, so not like I am complaining.

Have a Great Weekend!

Main S&P 500 Trends

Short Term Trend = Bearish
Medium Term Trend = Bullish
Long Term Trend = Bullish 

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