Volatile week…

Another B-E-A-U-Tiful day at the markets.  I’d like to remind everyone that the Fed calls TOPS not bottoms (at their meetings, special “emergency” intervention is a different story.  Yesterday, the markets rallied to an artificial top, leaving the Fed right yet again, glad I bought some choice gems like GOOG, BIDU, MA, CME, and the list goes on, but let me just cut to the chase.

Markets closed down hard across the board.  Breadth was dreadfully negative, volume was quite strong, and the bull rally got crushed in the last hour.  Did you see those margin calls flying in as the $INDU lost 5 points a minute for the next hour, falling nearly 3%.  What a close to the day.  Finally, the $INDU busted through the 50% retracement from 02-08, next stop is 9900, the 38.2%.

And the $INDU…

The $COMPQ, not to be put to shame, fell nearly 5% today.  What a week this has turned out to be, and it is not done yet.  However, we should be wary of a modest rally due to its oversold nature.  Not that it can’t get worse, and it often times does, but this is expiry, and strange lots of things have been acting up lately.  Notice the MACD resistance on the 2 lines.  We could bounce, we could breach, and we should know soon.

The $VIX was “up” again today, showing that some bulls are finally getting scared.  However, many will tell you, and it is a valid point, that the $VIX is approaching a resistance.  It is, and it could pull back, but I hardly think that means we will get a sustained rally, at least not at this point.  However, the $VXO was exhibiting some odd behavior.  Maybe Beanie is right….

At this point, I can surely say the trend is down, and that we should continue to take of another 7%+ in wave iii, and 20%-30%, maybe more, before wave 3 in the $INDU (wave labels as marked on chart).  I hope you already have an established short position.  If not, please use any rallies we may get to add to your positions.  Be sure to take profits and/or hedge when we reach extreme oversold conditions.  The government has been playing a lot of games, and wave count or not, the market action have been dicey.  I will leave you tonight with 2 charts.  The first is that big h/s top in $INDU I had posted a long time back, and sent to Dave even earlier.  The next is the updated chart.  So far so good!!

And the update…

Skål!