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Strategies & Market Trends : Ask DrBob

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From: wave3rules	8/6/2006 11:14:04 PM
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I have really gone over my charts this weekend and have mapped out option plays for the coming week which I expect will be exciting. This chart shows a new wave structure for wave 2 ( or B) up thats fits better. In any event I wanted to post this to bring attention to what I consider a very strong case for a potional big sell off in the very near future. I am talking of the breach of the longer term trend line that moved up into the channel the S@P has been in. That trend line was touched in May confirming it, bounced then 3 weeks latter breached it and has not bbeen able to get back on top. It shows the lower channel line just below clearly containing the breach. This last week we touched the lower part of that 3.5 year trend line and a doji formed. As the doji formed right under the trend line its a leads me to believe we will likely get a close below the doji low in the next couple weeks, and maybe this week and that points lower. Also notice the 50EMA has flattened and for the last 8 weeks have closed around that level. Also the 21EMA is close to turning down thru the 50EMA. I suggest a close below the doji low (looks like about 65% right now to me) points to a breach of the channel line and that points to rapid decent as the S@P gives up the ghost. The other factor that suggests lower is of course the wave structure, a nice regular flat seems to be complete, or almost complete for wave (2), if so we have (3) of 3 down, that being the case then the lower channel line is toast. I am aware that (1) looks like a 3 wave on the weekly however a 5 shows on the daily. Now of course if we can get back on top, and close on top the broken trend line then all bets off, but it sure looks like a last long kiss goodby, we shall see in 1-3 weeks and it will be confirmed one way or the other.

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