Wave 2 back up is complete. Prepare for a 3rd wave down in the major indices.

The DJIA/S+P500 decided to throw over on the 5th wave of the ending diagonal as I suspected it might in my recent topping model.  See the highlighted part in that post where I cautioned that the action to date might only have been A of 5.  And so it was.  Then B of 5 played out and C of 5 threw over.

That was very likely the peak of the entire bull market since 2009.  The chart has since taken out the upper and lower support rails and then back-tested from below.  Soon we should begin to see fear creep into the herd.  It's like a Godzilla movie.  People might hear about the carnage elsewhere but until they actually see the eyes of the monster in their own back yard, they are deer in headlights.   They should be buying puts as fast as possible while they are still ridiculously cheap (what I have referred to several times in these pages as a great depression in fear) but that kind of insurance costs money and so they hope to wait until the last minute, until there is no other choice before they buy.

Of course the price of insurance will have skyrocketed by then...