Carlione (The Godfather),
As i see it now, we are running through the paces still of this wave 2 correction that began from Friday a week ago's (1/15) lows. The 5 wave rally from 1/15 into 1/20 was wave A of 2. From Wed's 1/20's high, we have slid into a zig-zag abc correction for wave B of 2, with a of B completing on Thursday's late day lows, a of b of B ending near Thursday's close, b of b of B completing at Friday's open (expanded flat), and c of b of B at the highs on Friday (ending b of B).
Friday's selloff from the 2:40 p.m. EST peak began the c of B decline that will bookend the a of B decline. a of B was 45 S&P points in size, and lasted a full trading day. With that in mind, and since c of B began from 1243.5 (mar futures), we could and probably will slide down to the 1205-1210 area later in the day on Monday. But it can go no lower than that for now, because that's where wave A of 2 began, and B of 2 can not penetrate that point (oui?).
So from the late day (1:45p.m.-3:00p.m.) low on this Monday (around 1210SPX/9088DOW [Dow needs to outperform during the sell-off on Monday]), I expect a rally to begin labeled C of 2 that will bookend the A of 2 rally described above. That rally was 63 S& P points, so we could see something similar on this C wave of 2 rally lasting from late day Monday into later in the week. This rally MUST retrace 90% of the move from last Wednesday's (1/20) high to the low on this coming Monday, or first thing Tuesday if the selloff were to hang around a little longer than expected. That will be a very tradeable rally!
1208SPX & 9080 DOW must hold the selloff on Monday for this scenario to remain valid. Lower numbers will mean an alternate count is more valid, and we'd be immediately en route to the lower targets for this large scale 5 wave move that began on 1/11. Final projections can not be made quite yet, but early guestimates are for 1003SPX/7775Dow.
When this correction ends in early to mid Feb., I am fully convinced it will have given us one of the greatest buying opportunities in the history of the market. Will U B READY?
Regards,
David |
