The moves were tricky the last couple of days, but after today it's clear the bears are still firmly in control. For how much longer is now the big question. I can work a count that may offend some EW purists (but fits very well within how the momentum channels often spell out the waves) that says today was it for wave 3. The reason I say it fits well with the channels is most of the wave points either tap the outside boundaries or midline of the channel in a symmetrical way between the 2 and 4. I'll be the first to admit this count could be wrong. We could still be somewhere in the middle of the decline that started at 880 almost 3 weeks ago and as long as the yellow wave 3 holds the bulls down we will continue lower.We are working an Elliott wave count that’s almost done if we are correct, but we also see an alternate version of the count that would be much more bearish. We’ll have to see what the price action brings and be ready for either scenario. Thanks Doc!
Despite the bears still being firmly in command, I get a little more worried each day as we reach greater and greater levels of oversold that a major bull counter offensive is coming. 700 is a key level I am going to watch for tomorrow and if it is broken on strong impulsive volume (or looks like it is going to be) I am going to issue a full retreat to all remaining troops. Tomorrow is going to be one of those days where I have every position fired up ready to sell at a click before the open. The key with issuing that big final retreat is to be one of the first ones to bail when the tide turns. At this stage of the recent decline I want no part of still being short over 700. I'm not sure if I will look to play the bounce long or not if it comes, but there is no need to take short pain on both a channel break, horizontal resistance break, and 700 will also be some important hourly moving averages in the early going tomorrow. You can always reshort if it ends up a throwover and we break back beneath 700.
Now that your ready to run for the hills first thing in the morning on a breakout, the opposite could still happen and we continue to tank or even crash. If that happens, I'll continue to pull back troops at each stair step lower.
Oh, by the way… the General doesn’t want to have issue the retreat call for his troops, he’d much rather have the enemy troops surrender!
Cheap Trick – Surrender: