Critical point in the early collapse model, must read.

To start, my primary model is that the big fed driven bull market that has been raging since 2009 has now peaked and we have now entered the very early stages of a decline of historical magnitude.  This count has been confirmed on some technical support and resistance levels but not yet on an EW basis which requires 5 waves down.  This post is the summary of all that I see to be of importance right now:

First, some "fundamentals":

• The fed is cutting off stimulus this month. 
• Yellen speaks for the fed governors and she is signalling that even if such stimulus cuts result in visible problems that the wealth inequality problem has become her major issue.  IF the parasite sucks too much of the life out of its victims, not only does the host die but the parasite dies too.  The smart parasite will cut off a leg or two of its own if needed in order to reduce its support requirements so that the host can have more for himself. 
• Leverage in the markets got to the extreme at a time when volume has dropped significantly.  This makes it difficult to unwind a position without moving the price greatly.

Now some technicals:

• A valid EW count exists saying the peak is in.
• So far we can count 4 waves of the new bear: 1-2-3-4.
• Yes, this might also be a massive a-b-c but odds are very low for that.
• Alternation is present as you can see from the red boxes.  One is horizontal, the other vertical.
• Perfect parallelism is present (so far).
• Within the lower vertical rectangle you can see the outline of a typical "owl" with declining double top ears.
• The right ear appears (so far) to be a rising contracting wedge which broke down the lower rail and the backtested as shown by the red arrow.
• Wave 4 is a perfect 50% fib retracement of wave 3.

• The peak on the 19th was a very strong spike, often a sign of significant direction change.
• Below, red 1 tested but could not break the blue support line and then bounced in the characteristic vee style 2nd wave bounce.  Then wave 3 smashed through both the blue line and the long term orange line (see bottom chart for the meaning of the orange line).  Any trade above the purple line means this crash model is a bust and all short term positions should be closed.  Remember, this not confirmed until we get 5 waves down and right now it is only 3 with the expectation of wave 5 happening next week.  Trust that the bear has awakened but verify.

As you can see, breaking down that orange line is a big, big deal.  Now the chart is back above it which I find to be strange.  While the count looks like a 3rd wave has been put in above, we need to see a lower low begin to form right out of the gates on Monday.  If not, something sneaky is happening and I would be on high alert.  Of course any move above red 1 above means cover shorts first and ask questions later. 

If we get a lower  low from here, that will be confirmation that a motive wave has been put in.

Bottom line:
We should see selling right from the open on Monday.  Be wary of anything different.  We could end up with another deal like we got in late 2007.  It looked like a full a-b-c up from 2002 but then spiked one more time after the initial strong spike down before it was really done.  Again, any higher of a high than 16410 should make you very wary.