Waiting for the big wake up call - Dow down 300-500+ points in one day.

The markets still have not woken up to the fact that a major top has been put in.  The herd is milling about on the river banks trying to figure out if the next river to cross has too many crocodiles in it hidden just under the surface.  They fear that it does but they need some proof.  They need to see a few strong players get taken under.  Once that happens they will figure it out:  it is no longer safe to continue migrating north.  South is a much safer choice for now.  And so the herd will, with heavy heart for now, turn south.  And the markets will follow close on the heels of the herd.

I go send a probe post to some of the Yahoo chat boards now and again just to hear the echo of the lost people who hang out on them and gather support for their own way of thinking. It is not a place to exchange ideas.  It is a place to form mini herds which will give positive reinforcement that their world view is correct, even when it's no longer working for them.  The AAPL board is a perfect case in point.  I warned them of the coming downdraft in share prices.  I provided charts and logic.  They told me to stuff it and got very rude. 

And so my model slapped them upside the head and still they learn nothing.  I have no doubt that many there are quite intelligent but herd-think is omnipresent in all of us and it controls us unless we are constantly on our guard.  That is the value of the EW model more than anything else IMO.  It tells me when my worldview is incorrect by violating key levels.  Even though the models seem to be working toward my world view I am constantly re-thinking about them, trying to fight off herd think in my own mind and watching for trigger violations.  Until the Big Reversal is confirmed (which it is not yet), this could just be an a-b-c retracement.  One major confirmation I am looking for is a bit 300-500 point sell off in the Dow that contains a big gap.  This will either be 3rd of C or 3rd of 3rd so it is not confirmation in and of itself.  But after that happens the market will either have to rebound strongly to scare off the lions, hyenas and crocs or it will have to turn south and run away.  If a 5th wave down occurs, the chances of a major reversal being in progress go way, way up.  We are not there yet.