Much Ado About Nothing

Not feeling it here – at least not yet. Let me explain:

Obviously price is always king – granted – and we are seeing some pretty nice down candles. But again, the question arises – is this an a-b-c correction or could this be the beginning of a third wave?

Now something we have learned in the past year is that NOBODY has a crystal ball, especially in a narrowly traded market such as this. What are the odds at this stage? Well, let’s see:

• Have we broken any important support lines? – No.
• Do we see a strong confirmation on either the Zero or Zero Lite? – No.
• Have there been distinct divergences in the past few weeks. – Yes, but they were strongly retraced.
• Is NYSE A/D ratio excessively bearish? – No, we are painting a 0.8 right now and yesterday we closed at 0.5.

Yes, we did make new highs yesterday and those were strongly reversed, that is definitely a point in the bearish court. But it’s all in the follow through and we need to see more evidence. What I would NOT recommend doing at this point is to chase the tape down. The real move already happened today and the big boys are heading for the Hamptons. Your chance to risk some short exposure was after today’s early morning melt up (which I suggested last night btw).

If there is follow through on Monday THEN we could be actually looking at a meaningful retracement. Right now it’s all just talk and this is noting that couldn’t be reversed in a single session. Food for thought – play it safe. In the end it all comes down to capital preservation.

Here’s the live Zero for your convenience (reload page to see the live version):

UPDATE 4:19pm EDT: Guys, we closed at an NYSE A/D ratio of 1.0157. Not bearish at all – I know you all want this to be it – but let’s not fall for yet another bear trap, shall we?

Cheers,

Mole