I was wrong about NASDAQ COMPX: It's worse than I thought.

One of the dangers of betting on short term sucker's moves against the primary trend is that you might get it wrong then the trend is not your friend.  Case in point: the NASDAQ Composite.

In this post I clearly stated that the then-bounce was likely to be a dead cat but I gave it one more fluffy jump before expecting the 3rd wave down.  Fortunately, I did not try to play it long.  Instead, I bought more GOOG June 840 put contract.  GOOG has since turned downward strongly and is now almost 4% down on the day.  When you start getting big moves against the old trend like that, you know the herd is watching and getting worried.  The collapse in GOOG shares will be dramatic IMO.  The recent screwing of institutional investors shows amazing arrogance by the "non evil" management.  I wonder how they ever thought that would be accepted by the big shareholders.  It moves them from being owners of the company to flying baggage class on an airplane whose captain has locked the cockpit door and will not be listening to any complaints from the passengers.

I'm also watching the the Nas COMPX melt down into a 3rd wave.  The big question on my mind was whether the area in blue was going to be a triangle or not.  This matters greatly to the fate of the index.  Why?  Because triangles are always the penultimate wave according to Prechter.  So that would make it a 4th or a B wave.  But the chart could not possible be putting in that massive of a 4th here so I would have to have called it a B wave.  That would have meant that the current drop was only an a-b-c retracement when in fact it is looking ever more like the start of a new bear market on a daily basis. 

If this is going to be a 3rd wave down then expect it to be at least as long as the 1st wave.  Then a sideways 4th and then a 5th wave down.  5 waves down will be the first major confirmation of a new bear market.

I love how the market collectively behaves like a wild animal; those "animal spirits" Keynes mentioned are real.  The formation below was designed to be camouflage.   It was designed to look like a B wave triangle without actually meeting the requirements of 5 rail bumps.  It was designed to fool as many of the market participants as possible.