I then got back in @ 3.34, but they counterattacked by stopping me out at 3.25 before reversing higher into the close. I decided to get back in ~ a dime higher at $3.45. The reason for wanting to be in is that the DJIA could not break back up into the ending diagonal channel. Also, as you can see from below, the chart topped out right at the 61.8% fib. Finally (and most importantly, I found a wave count that works for a retracement. In my experience, any triangle works as a retracement and in certain cases as a motive wave.
The tricky triangle in this case is an expanding wedge. The reason it is a triangle is that the internal waves can be counted as 3s.
I don't know that this count is correct but I don't have to know that. All I have to know is when to bail and that would be if we get a higher high tomorrow that breaks up past the 61.8% fib. Even then there is a count that would keep the expanding wedge valid which I will discuss should it become necessary but my rule of thumb is that anything past the 61.8 fib gets really iffy really quickly. Still, if this is a big 2nd wave into the bear then I would expect deep vee action. My stops are again set at $3.25.I want to note here that the RSI is only 50 right now. Normally I would want to see 80 or higher but if this is the start of a big bad bear then the RSI will trend toward the low side as wave after unexpected wave of "panic" selling (AKA intelligent self preservation) occurs.
Tomorrow is an absolutely critical day for bear market watchers. The time between tomorrow and Wed of next week has the highest potential for my "500 point single down day in the DJIA" indicator to happen. I have been predicting for months now that such a day would arrive but never provided any kind of time frame before. I'm now venturing that "the opening event" of the new Big Bear will occur within this time frame (for what little my guesses on this matter might be worth).
2 comments:
Nope. I kept overnight and got wrecked in the pre. Decided to hold and wait it out. Once the 500+ day happens, should we keep overnight? how long should we expect the third wave to play out?
Once the 500+ point day happens I think the technical damage will be significant. I cannot tell you in advance whether to hold over night. Such things must be gauged in real time.
What I can suggest is that once the confidence bleeds out of this con game (as evidenced by huge single day moves in stocks and indices), the biggest risk to your financial expansion will be that markets will head down with you on the sidelines.
Again, until we have the first motive wave confirmed, we have to be extra cautious because it might be a false bear. But the odds of that being the case are plummeting through the floor as big names like IBM, AMZN, etc. go into freefall.
We are very, very early in this bear and it promises by every fundamental and technical metric that I know of to be a doozy. Dow 5k for sure IMO and I won't say that Prechter's "Dow sub 1k" is impossible by any stretch. In fact I have a sneaking suspicion that it will actually happen.
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