A somewhat surprising and powerful move to the downside today. Over the past few days, I have been expecting a very sharp wave (iv) down in my count on the SPX. However, it was a little sharper than I had expected. I thought that 1191 would hold. We clearly closed below it today. The Dow also broke 11,000 and the Nasdaq broke 2500. Some key pivots were broken. Also, market internals were also very weak. NYSE Breadth was as low as 19:1, and closed almost at its lows around 18:1 down.
I now have a possible bearish count as well as a bullish count still in play. But with the velocity of the down move today, the bears could take control real soon. On the bearish count, this ovbiously is a minuette wave i down.
It looks as if we have 5 waves from our highs, and they look complete. We could get a strong push back up for wave ii over the next day or so. The 50% retracement for that is around 1200. But 1191 is now resistance. After that retracement back up, we could sell off very hard in a wave iii.
Here is a rough sketch of the waves in the down move. Again, this is just a rough sketch.
We could actually open flat and then sell off to perhaps 1178 before bouncing for wave ii. If not, we may just bounce right off the open.
The ultimate bearish count is that this down move is something bigger than we think, and we continue to sell off again tomorrow.
The bullish count is that this infact was just a sharp wave (iv), a little sharper than expected just to throw off some bears. We know how the market loves to fool everyone.
If this is the case, we should start a strong up move over the next few days.
The US Dollar came close to making new highs for its uptrend today. We could also have a very bullish pattern playing out.
There is a potential inverse head and shoulders setting up on the USD. We seem to have a break of the neck line. If we continue up, the target for the inverse H&S is around 83.90. This could easily happen if the EURO continues to fall due to problems with Greece.
My count on Apple could have been a little off. We have come down too much for this still to be a subminuette wave iv.
The count for now is that Apple has topped. Breaking below 257 could confirm this.
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