Cashin has known risk of a major pullback has been in place for months. I think he is now on topping watch as you can observe in his recent interview with Pisani. Stocks almost went over the cliff, but of course long time readers of my blog know that major break outs or break downs do not happen on 1st waves. Like a herd of water buffalos they make a series of probing charges and retreats before deciding to go for broke and when they do, the opposition breaks.
And so we will likely get our wave 2 retracement which will last 1-2 days and give the markets a bit of calm. But then, likely on Freaky Friday, the markets will turn back down into a massive 3rd wave and all Hell will break loose. At least, that is, if my EW model is correct. Despite the risk of predicting such short term moves, I will be laying into it with vigor on the short side (to say the least). I have figured out an ultra leveraged strategy using tight stops that I plan to test out. It is designed to produce asymmetrical returns while stopping out quickly for small losses if I am wrong.
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