Monday, August 29, 2011

Pennance of the Penant...

I know I have not been posting much...that will change soon.

The problem is that EVERYONE is watching the pennant that looks like it needs another low down to the 1,020 to 1,040 area in the SP500...I have not wavered from my expectation for the dollar to hit 70 and the Euro to make 1.47 to 1.5ish...The current pattern, I am afraid to say, is the worst of all scenarios...It is most likely NOT a wave 4 - it is most likely true that we completed wave 1 down and this bounce is wave 2...targeting 1,240. My clients have been alerted to this already for the last week or so...the problem with the current pattern is that it sets up a wave 3 that makes this dramatic wave down (wave 1) look potentially mild. It is certainly hard to imagine that it is possible to get harder selling than what we got on this recent wave down...however, that is sadly what looks to be in the cards. It would have been preferable to get a wave down to a new low than to have the whole move from 1,370 to 1,070 be a wave 1...but that is what it looks like to me. My systems will likely short this bounce with abandon...and I encourage everyone to think about just how dangerous this next move down has the potential to the looks of things we will be taking out the 2009 lows more quickly than anyone expected.
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