Looking for Lower Lows (Again/Still!!)

Today’s action was a rough blow to the triangle, but we cannot completely eliminate it yet.  Yes, it looks funny, it smells funny, and it is not very likely here, but is has not been PROVEN incorrect.  With that, the triangle will be tossed aside with a break of 1149.12 in $NDX.

Today, however, we did have a lower CLOSING low, signaling yet another lower low on the decline.  What does that mean?  Wave [5] down is most likely underway.  That said, we are likely inside wave [3] of [5] down right now, and I see wave [5] itself bottoming out around 1000.  1100 could be a target if wave [5] is tracing out an ending diagonal.  After testing 1150, I would expect a bounce, as that is our prior low.  From the top of that bounce (should we get it) will be the best entry for this move down.  Targets for that would be 1175 and 1200.  Of course, as I said before, it would screw the most people if we just gapped down from here, however, given such strong resistance (i.e. prior major low), gapping through that level does not seem likely for me.

Another strong piece of evidence for wave [5] down, aside from the ghastly 9:1 negative breadth today, is the XLF.  In the past, when we were dealing with wave [2], we said that the markets could not go lower without the financials dropping too.  Well, XLF decided to put in a lower low today, confirming the notion that the market wants to drop.

I had said on Monday that we needed to drop soon, hard, and impulsively.  Thus far, that plan has played out nicely with most markets trading nearly 10% lower than Monday’s close.

I also talked about the $VIX on 11/04, saying that had we closed outside the 2.0 BB we would be set up for a “sell signal.”  We did not close outside, but completed the other requisite steps for a “confirmed sell signal,” further affirming my notion that we should be in for another 10-15% (or more) sell-off.  During this state of capitulation, I would expect the $VIX to be topping out around 100, which SHOULD act as resistance.  Clearing 77.5, for me, would be a strong indication.

Here is a chart of FSLR, as I see it is nearing double digits again, 6 days from my sell recommendation.  Yes folks, I still believe there is more downside on this puppy.  First target is mid-70s, but I could see as low as 50 in the cards.

Another beautiful thought (I am not going to post the chart) is GOOG.  Many, if not all, of us played the break-out beneath 300.  Some of us took profits, and some are holding, but either way, there is more downside there, but the markets were watching this too.  GOOG below 300, and giving no effort of a retest (yet), is yet another strong piece for the bearish case.   Should GOOG break 273 (my next target), there is nothing but air until 200 (with a small argument for 217).  Think about this folks… Another 70 points down in GOOG…

I leave you with those pleasant thoughts…

Skål!