Downtrend still in effect

Even though the market rallied strongly yesterday, the S&P did not go above 1225. This is not to say that it might go above it next week. But today the market ended at 1199 so we are still in a downtrend. The market today was tepid, only rising about two points. We would like to think that wave 2 is over and that wave 3 has begun. Time will tell. The market can be perverse and can always rise to a new high. My strategy is to remain in cash or short the market.

On another note, the Euro could be in trouble. It is a house of cards. Once one nation defaults, the whole Eurozone could fall apart. The Irish could use cash to bolster their economy. The Eurozone wants to give them more money, but at a price. I hope the Irish see the new money as a Trojan Horse. They should not give up an inch of their hard fought nationality. Their main incentive for the US to set up businesses there is the low low corporate tax rate. The The Irish must keep this advantage. My humble advice to the Irish is to go it alone, keep their low corporate tax rate. Default if you must on the debt. Screw the Germans, French and the English. Up the Irish!

Trend change

Obviously, the trend has changed from up to down. However we are not sure if wave 2 is definitely over . The Dow and the S&P indexes have certainly crashed through the 20 day moving averages. The next support that must be pierced is the 50 day moving average. The Dow 50 day is sitting at 10967 and the S&P 50 day average is at 1165. Both of them are within striking distance within the next couple of days. Is it a sure thing? No! There is an alternative view that the markets still must complete wave 2 or B however which way you label the move. The strategy, if you think as I do, is to be in cash or be short the indexes. Be wary as the markets approach the 50 ma, as this may cause a reversal. Be on the right side of the market. All longs should have been closed out.

Is wave 2 over yet?

Well, we did think that wave 2 was over and that wave 3 had started way back in October. Hopefully, wave 3 has now begun. But I have been chastened by my last blog posts. Wave 2 has been difficult to comprehend and I have realized that this is always the case. Of course it didn't help that Federal Reserve injected more than 600 billion dollars into the system. Why did they do that? Obviously they think the economy is in deep trouble. They are actually trying to jumpstart inflation. Then need the consumers, that's us, to go out and buy. Will the strategy work. I don't think so unless they can find jobs for the 21 million people that are out of work. The injection of money was supposed to raise the price of stocks and of assets. It worked initally. The stock market jumped and the price of gold took off. But in the past week, gold and stocks corrected or began the start of wave 3. But we have to be careful. This might be another fake out. The market is trending down. But will it continue to trend down. We hope so. But there may be another petit wave up to complete wave 2. I think the best strategy at this time is to be in cash or be short the market. But be careful and be patient. Tricky wave 2 may still have some life left in it.

Down trend back on track

It's been a long time since my last post. The reason is that wave 2 was not yet over. That was my error. I jumped the gun thinking that it was over without waiting for confirmation that it had broken support. Instead of going down, the market continued going up. A lot of patience was definitely needed. But today, the market turned down in a meaningful way. The S&P index broke support at 1163. The Dow index broke support at 11,000. At this point I believe that wave 3 has just begun. But, once again, time will tell. You should be in cash or be short the market. I am short the market. I am short the indexes, and not short any individual stocks. How long will this downtrend last? It may last into 2012. And it will be followed by a strong uptrend. The important thing is to go with the trend and not go against it. Another confirmation that the trend has changed is that the dollar index has turned up. When the dollar index turns up, everything else goes down including gold, silver, and most of the other commodities. This is additional confirmation. Best to your trading.

Downtrend back on track!!

It has been ten days since I last posted. During those ten days I patiently watched while wave 2 completed. I hope it has completed because when dealing with stocks you never know. That's why short term trading is so difficult. Recently, Tim Knight, who authors "The Slope of Hope" blog trashed Elliott Wave Theory because it didn't work for him as a short term trader.. Everyone was confused about the termination of wave 2. By the way, today, Thursday, is the Fall Equinox and also there is a full moon. There is a strong correlation between the stock market and the full moon. Reversals often occur at this time. Not infallible, of course! So, what should we expect at this time? The end of wave 2 and the beginning of wave 3! Wave 3, as has been pointed out, can be very violent, especially in a bear market. Wave 3 may take us all the way into 2011, so be prepared for it. Be short the market or be in cash, or short term Treasuries. Another author, who seems to get it, is the author of "XTRENDS". He is using another method involving math and geometry to predict a downtrend at this time.

Are we there yet?

No, we are not there. Where? Down, down, down! Actually we have witnessed a short term uptrend within the long term downtrend. This is normal, but very trying, especially for short term traders who get whipsawed often. The above chart represents the Elliott Wave Theory pattern five waves down and three waves up. We label the waves, 1-2-3-4-5 in downtrend and A-B-C in the correction waves. Wave C has completed and we are in the beginning stages of Wave III. The arrow shows where we are right now.

Downtrend resumes

The beginning of the month, and a holiday weekend, often witness an uptrend in the market. This time was no exception. The market moved up although it was with low volume. The follow through that we mentioned did not happen. The uptrend ran out of steam and the downtrend resumed today. Hopefully the market will break through support at 1041. It has already failed three times to break through this support level. If it does so this time it will be significant.

Another rally filled with Hope

Today we had a great rally which was enjoyed by the media and by the Bulls. They hope that this is the beginning of a new upward trend. Alas, I think they will be very disappointed. For the next few days the markets may continue to go up. Why?, it is the beginning of a new month and many people put money into the market at the beginning of the month. The test for the uptrend will be whether the volume and the upthrust can continue. In the past, there was no follow through, and the markets began to go down again. I believe the same thing will happen with this upward move. It will run out of steam. Time will tell. I believe the downtrend is still in play for the intermediate and long term periods.

SOX is leading the market lower

The markets are being led lower, not by the large cap stocks but by the small cap stocks. Check out SMH (semiconductor index), the Russell index, and the Nasdaq. These are the stocks that are leading the markets lower. This was noted earlier by John Murphy, an esteemed technician. And today, these were the indexes that closed lower. The Dow, S&P indexes closed slightly higher. Also, remember, that on the last and first day of the month, the tendency is for the markets to move higher. But, for me, the stock market is still heading lower and we are in the third wave. Stay in cash, or go short.

Hope trade fails

As predicted the Hope trade failed and the markets turned lower. The Dow closed below 10,000 again. This number is not really important but it is a psychological number for the Bulls. They made a big deal of it on CNBC when it was surpassed for the first time. When it goes down, the media ignores it. But everyone is aware of it and they don't like it. The other indexes also have their milestones which will be broken. The next milestone for the Dow is around 9600, and then 9200. I think these numbers will be reached and then broken. Stay alert! When wave 3 is finished there will be a powerful wave 4 uptrend.

the Hope Trade is back!

The Hope Trade is back! After being down for the past six sessions, the market made a dramatic move up. Traders jumped in and bought the rally. They hope that the market has reversed and will continue to go up. Next week we will see if they are correct. The market has to continue to go up on increased volume for the Bulls to be correct. If past history is right, the rally will fizzle out and the downtrend will continue. This is called the Hope Trade because in a Bear market, every rally is a Hope that the downtrend has reversed. When the downtrend returns, the Bulls, once again, lose hope and begin to sell their stocks. This can and does cause panic on the downside. Remember that we are in the beginning of Wave Three which can become quite violent. Wave Three has quite aways to go, definitely all through September.

Trending lower

The markets trended lower yesterday. Today's low was lower than July 19th. The next target low is around 9600. The triggers tomorrow will be the GDP report and Bernanke's speech in the after noon. $INDU - Daily Candlesticks: "

via StockCharts.com

"

Dow ends up today!

But don't be fooled. This is not the start of a new uptrend. It is merely a reaction to the new lows made today. Remember, the market does not go down in a straight line. All of the indexes made new lows and then corrected. The main trend is still down. The downtrend may resume tomorrow or in the next few days. But today the dow went below 10000 before correcting. I believe the Dow is headed 800 points lower to around 9200. The other indexes will also go down. At that point I believe it will have a significant rebound and I should cover my short positions and either go long the market or go into cash. Check out the Dow chart to keep it in perspective. Click on the chart to make it larger.

World indexes are trending down

Stock markets all over the world were down today. Many commodities were also down. The media is telling us that the cause is because of the housing report that came out today. The report told us that fewer houses were sold this quarter and this caused the markets to go lower. But anyone who has been following the financial news knows that when 10 percent of Americans are out of works, people can't buy anything. So, it is not only houses that people are not buying. Back to school shopping should be going on now, but the stores are empty. Lack of jobs is the real reason the markets are going down in my opinion. Tomorrow the markets may go down again. When the markets do reach a bottom, there will be a massive correction. But this reversal may not happen for a while.

Tomorrow's housing report will move markets!

Unfortunately for those who are still holding stocks, the market will not like the news concerning house sales. It is expected to be bad news and the markets may go down. Today, the markets declined rapidly during the last hour. Check the Dow index, it closed around 10150, which is about 100 points lower than when we last looked at the chart. The support for the dow index is around 9650 which is 400 points lower. The stock markets all over the world, including Europe and Asia should continue to go lower.

Semiconductor index leading markets down

Most of the indexes closed down on Friday continuing to confirm the downtrend. Small stock indexes very often go down before large stock indexes such as the S&P index. A small stock index would be the Russell 2000 index. Another small stock index is the SOX index. This is the semiconductor index. This index is the first index to close lower than its previous low. The significance of this is that this index if full of stocks in the Nasdaq index. So, the SOX Index will drag the Nasdaq index down. However, it should be noted that not all Ellioticians agree with this scenario. Caldaro, a noted Elliotician, thinks that we are really in an uptrend. He bases his opinion on the wave count. He sees five waves up from March '09 to April '10. I see only three waves up during this period. Ellliot theory states that 5 waves up would indicate an uptrend. Three waves up indicates a corrective move and is therefore a downtrend. Time will tell whether we are in a downtrend or an uptrend. Stay tuned.

Dow may go down

The indexes closed down on Thursday and may continue going down today (Friday). Today is options expiration day and that is often a market mover. Moreover we are going into the uncertainty of the weekend. There is a strong probability that the markets will continue their downtrend. However, the trend will be confirmed when the Dow goes below 9600. Today it stands about 10250. We appear to be in the beginning stages of wave 3. Keep a chart before you to keep your perspective on the intermediate trend of the markets.

short terrm trend is near the end!

The short term trend is close to ending. You can see from the above chart that it did little damage to the downtrend.
Could it go higher? Of course it could. But the probability is stronger that it will not go much higher and will resume the downtrend. And everything about the market is probability. Wall Street resembles a casino and don't let anyone tell you different. Know the rules of the game. Or your money will be taken away from you. Remember, in a bear market, the market moves down in five waves and corrects in three waves. Right now the S&P market is trading between 1097 and 1080.

When it drops below 1080, you will know that the downtrend has resumed. Be in cash or short the market.

the downtrend will continue..

yes, the downtrend will continue. Yesterday, we said that the market was oversold and that it might be up for a few days. Today's rally did not change anything. It did relieve the oversold condition a bit. The market may be up again tomorrow but it will soon resume the downtrend, The benefit of being an intermediate term trader is that you do not have to react to every move of the market. Today the short term traders were in a state of panic and many lost money. You should be in cash or be short the market. This market has a long way to go down. The news today was not good but CNBC did everything to give it a positive spin. Beware of the media. The media is not your friend. But, is it possible that we are really in a bull market? Yes, it is possible but the dow would have to go above 14000, if it's a bull market. Today it is around 10400. Stay the course and be patient. Right now the market is bearish.

markets oversold short term

Today's markets didn't go anywhere. The volume was very low. The Dow was down slightly and the S&P and the Nasd was slightly up. But we know that the markets are oversold and could turn up for the next few days. Then the downtrend will continue. Continue to hold cash or go short. I am not a short term trader but I am waiting for this trend to run its course downward. Then I would hold cash or buy long for the minor 4th wave. On studying the charts I noticed that the major wave 1 lasted 13 months, and that major wave 2 lasted thirteen months. If we are in a 13 month cycle, then the current wave which started in April will end in May 2011. The prices will be lower than they were in March 2009. October has been known for its stock market declines. I would be wary of a 3rd wave decline starting in October 2010.

Hindenberg Omen

This has been all over the internet this weekend. If you don't know anything about it check the Wikpedia article on the Hindenberg Omen. It sent a signal on August 12th. It means that a market crash is coming. I have been talking about a third wave which is sometimes similar to a crash. So the Hindenberg Omen confirms that the third wave is about to occur. Of course it is not absolute. Nothing is absolute. I have been reading the book on "The Balck Swan." The main gist of this book is that something may come out of the blue to upset any theory that you might be following. As I said, nothing is absolute. Everything is probability. Keep in mind that Wall Street is just one large casino. It's a game so you must know the rules. Check out the NASD INDEX . It does seem to be leading the other major averages. It closed around 2100 and will be under 1300 when this third wave is over. Check it out.

Down she goes!

The stock markets appear to be in a downtrend. Note the S&P index. It rose from the 600's in March. It completed a three wave correction rally in April. (A, B, C) at around 1200. It then fell to around 1080 and tried three times to go above 1130, and each time it failed. It is now in a wave 3 decline and ended on Friday at 1080. Although it is short term oversold and may rally on Monday, the decline will probably resume. A third wave can be spectacular and sharp. This decline will ultimately end below 666, its previous low. It is interesting to watch it unfold.

wave count 2

This is my wave count. Wave count is important in determining where we are in the market. Knowing where we are is very important because it tells us when to buy and when to sell.

Wave 2 began at dow 8250 and ended at 11250. Wave 3 down began at 11250 and small wave i ended at 9500. Wave ii ended at 10700. Wave iii is now in progress and today is at 10250 and headed lower.

Down trend confirmed

It is pretty clear that the downtrend has started. Keep in mind however, that the market is oversold in the short term. You are now fairly safe to short this market. Hold the shorts until the end of this move. When does it end? I use Elliott Wave Theory. This tells me that we are starting wave 1 of a five wave downtrend. I expect this move will last at least two months.

Some trend lines broken

The Dow index has not yet broken its short term trendline. Other indexes such as the NASD has broken the short term trend. Although I am short the market, prudence says to wait until all averages have broken the line. Be patient! If the trend has reversed there is plenty of time to make a lot of money,. The danger here is for those who are long stocks to stay long and hope for the market to go up. They may lose a lot of money and it may take years for the markets to go back up. This is an important turning point. This is not a short term move. This is, at the very least, an intermediate move. This downturn will last for at least two months, maybe longer. Take action as soon as all the averages have broken their trend lines. This may happen as early as today.

Has the trend turned?

It is too soon to declare that the trend has finally turned. However, we are close to confirming it. Another day like today and we can say the trend has turned down. The futures tonight do indicate that the market will continue going down. But we have been fooled before so we know we have to be patient before jumping on this bandwagon. Everything is supporting the change in trend so the rest of this week is important.

Has the trend turned?

Market up on low volume

yes, the market is up short term. And we are still waiting patiently for the reversal.. When the market goes up on low volume it makes the whole move suspect. Main Street is not buying stocks, they are buying bonds to avoid risk. They have been hurt enough. This is Wall Street buying and selling to Wall Street hoping to suck in the retail trade. They will not buy stock for a long time. Today, the market went up on the lowest volume of the year. It is meaningless. The advance-decline line is also in a downtrend. Yes, short term you can make money in this market but when it reverses it will happen very fast. Stay in cash or be short. Be safe. The market is getting close to a change in trend every day. It is coming. Be prepared!

One move does not make a trend

no, a trend is formed over a longer period time. If you are a short term trader you would be encouraged to buy stock as it appears to be going up to test 1131 again. It has failed twice. An intermediate trader is still looking at a downtrend. But we have to be cautious now because Relative Strength, Macd, and Stochastics and PPO are signalling a change in trend. Is it for real? Only time will tell. Hopefully the short term will resume its downtrend as well.

Stuck in the middle

The markets appear to be stuck in the center of the trend. High in S&P is 1131, and low is 1113. Waiting for the market to break either way. Who will win this battle, the bulls or the bears. The employment report today may be the catalyst. Be patient.

when will wave 2 be over?

No one really knows the answer to that question. but we have had several false alarms. I think the market will go down after it completes the wave 2.. We just have to be patient. Any day now. soon, I hope.

Bear Market lives on!

After the impulsive strong move up yesterday, there was no followthrough at all today. The markets resumed their downtrend including all the major indexes. Is this the beginning of the long awaited "C" wave or wave 3? Time will tell. I believe probability favors the continuation of the downtrend. Intermediate traders are still short or in cash. Many of the day traders lost their shirts today. But they may try to move it up again tomorrow frightening the shorts that are unsure of their trade. Be patient and you will reap the reward.

The Markets surprise move!

The stock market indexes made an impulsive move up today. As we always warn, no one actually know where the markets will go on a day to day basis. We are in a bear market and volatile moves in the opposite direction do happen frequently. Can you make money on these moves? Only if you are a day trader! This may last for a day or two, and then the downtrend will assert itself again. It will be interesting to see if the market follows through with the move. Stochastics and MACD still support the bear market thesis. For the intermediate term trader, it is painful to watch this kind of impulsive move but this is part of the trading game. Be patient and you will see the market move down again, and new lows made.

The wave trend is now down!

It appears that the downtrend has finally started. The highs for this move appear to be in. Caution, however! The market may have a last minute surprise for us!. But this is the stock market game. Intermediate players should be short or in cash. The next question to be answered is how far will it go down. When do we take profits? It will be a long time going down. It should last for a couple of months. It pays to be patient.

Downturn beginning?

The S&P has been down for three days. Is this the beginning of the long awaited downturn? I hope so. Time will tell. Be patient. Remember! The third wave will be violent. We will definitely know where we are. Stay short or be in cash.
We returned home from Ireland today. We had a great vacation and accomplished all of our goals

markets exhausted?

The markets appear to be exhausted! S&P at 1113 on low volume. Other indexes down slightly. Have the bulls reached the top of the mountain and are now sliding down? Time will tell. Meanwhile, 1131 is my line in the sand. Today we drove up to Belfast to visit with two young ladies who came to live with us for a summer during the "troubles" in 1989. They both now have their own families. We had a great visit with them. They are like daughters to me. That's what life is about!

Market remains up

The market remains in a short term uptrend. My line in the sand is 1139 in the S&P. Hopefully it will not reach that point. Today was good in another way. One reason that we are in Ireland this week is to do work on the family tree. We visited the geneologic center today and they gave us clues. We found out where my mother grew up and located the house on google satellite. We set off and found the house where she lived 100 years ago. There wss no one home so we could not go in. But so many other good things are happening that makes this trip memorable. I hope the market behaves itself and starts to go down soon.

Top of the Mountain

yesterday's move up went through the trendline at 1109. The next move should go no more than 1131. If we go over 1131 we will be in an uptrend which will cause us to cover the shorts. I hope we do not have to do this. This should be the end of the A, B, C correction rally. After that we await the 3rd wave. But admittedly, this move has gone farther than I thought it would. It pays to be patient, but who knew it would be this painful.
Today marks the end of the Joe Mooney Music Festival here in Drumshambo. It's been a great week and Theresa's fiddling has really improved. Next week we will be visiting friends and relatives and famous sites. Have a great weekend.

The trend has not changed!

Days like yesterday when the Dow was up over 200 points can be very unnerving. Especially if you are a short term trader. But sharp upmoves are normal in a bear market. However the upmoves are difficult to catch. This trend is still in place unless the Dow goes above 10600 and the S&P over 1130. So it has a long way to go to change the trend. The market is still going down, it's just a matter of time. Meanwhile my walks in Ireland today has brought me to a couple of cemeteries searching for ancestors. I came across a "Famine Cemetery" in Drumshambo. These were for the poor who died from the potato famine in the 1850's, so sad to recall those hard times in Ireland. People today are dying from hunger, it's a great use of your money to help the poor. We are in the money game here, remember it's only a game, and you can't take it with you. Give some away!

yesterday's move

Yesterday, the markets moved a bit higher which was a surprise. Once again, be patient! The markets are positioned still to begin wave 3 down. Check the stochastics and the MACD for the Dow industrials and the Naz;, they all are pointing down. The move is imminent. I have also just finished a book called "The Big Short" by Michael Lewis which clearly explained what happened when the housing market collapsed. Only a very few acted when they saw it coming. They did not follow the herd, everyone on Wall Street thought they were crazy when they started making bets against the decline. At this time, Wall Street is just beginning to fear a stock market meltdown and are looking at ways to protect themselves. My strategy is to short the stock market so that when it falls, I will be prepared. By the way, Ireland is a great place to visit, it's not just the beautiful scenery, but it's beautiful people. They have been very friendly and helpful.

travelling in Ireland

Missed a few posts because of travel in beautiful Ireland. But the markets are rolling over and a new wave, wave three is positioned to drop. The Macd and stochastics are also lined up. Everything is pointing to a down wave. I am short for this phase of the market. Patience is important for any investor as there are up and down days. I tend to be an intermediate term trader, so I only trade two or three times a year. As you know, the trend unfolds in five waves, and the correction in three waves. IBM was helpful for the bear cause today and should put pressure on the tech stocks today. But travelling here in Ireland is great, and thank goodness for the computer and the internet because the news here is without the financial stuff.

Top of the mountain

It appears that the indexes have reached the top of the mountain, that is, stochastics has reached a top and may turn down. And although most of the indexes were up again today, they appeared to be exhausted. The S&P actually turned down. So, I remain short the market. However, no one knows where the market will go. Therefore I must be vigilant and if the markets continue higher and go higher than the previous high, then I will know that I am wrong and will cover the short. I hope I am right and it turns down.

patience is a virtue

The stock market is up again today. I am waiting patiently for the powerful third wave to begin and send the market down strongly. Most of the pundits I heard today say that we are in a bull market. And that it is being fueled by good earnings reports. Certainly, Alcoa and Intel came in with great reports. The trade deficit was terrible but was unnoticed. I continue to be short and await the next big move.

trendwaves: up, up and away?

trendwaves: up, up and away?

up, up and away?

No, it's not up, up and away. What is happening is that last week the market dropped quickly and got oversold. It must alleviate the oversold situation before it can continue its downtrend. This downtrend may start next week. My strategy is to remain short of the indexes. It is expected that the downtrend will be quite steep. On Thursday, the 15th, my daughter and I will be travelling to Ireland on vacation. I will try to remain in touch.

is this wave 4?

I doubt if this is wave 4. The market went up strongly today because it was deeply oversold. You could see this by looking at the stochastics for the S&P index. Go to www.stockcharts.com/ and bring up the $S&P chart. This rise may continue for a few more days. We are still in wave 3. The best strategy imho is to stay short and wait for wave 3 to work its way down. The major trend is down. There will be a good opportunity to go long after wave 3 is near completion.

Fireworks coming?

The trend for the indexes continues to be "down" or bearish. The market is well oversold, that is, it has been down for several days and we can expect a reversal of the trend. However, the market may get more bearish before it reverses. One strategy is to cover your short position and take profits when this final wave down is almost complete. Then, either hold cash and hope to short the market again at higher prices. Another strategy is to cover the short position and immediately buy (go long) an index that will retrace the previous downturn. Hold the long position until it hits a fibonacci retracement number: 0318, 050, or 0618.This should be a three wave rally: A, B, C. Take profit and short again for another five wave decline. At any rate the market is following the Elliot Wave script.
ps. an article on Robert Prector, the author of the Elliot Wave Theory is in today's Sunday Business issue of the New York Times. It's a concise summary of his history on the market. He has made mistakes. No one is perfect. No one can always predict the correct direction of the market. But EWT does work for me most of the time. Always check the charts and label the waves. Remember there is always an alternative way to interpret the market. It's fed by humans after all! Fear and Greed!

$SPX - SharpCharts Workbench - StockCharts.com

$SPX - SharpCharts Workbench - StockCharts.com

go to www.stockcharts.com/ and bring up the chart for $SPX.
You will notice how strong the downtrend is for this move of the market. However, at some point in the near future, the market will make a strong move up. Hopefully I will be able to cover my short sales, and buy stocks for this "up" or bullish move. How will I know when this will happen.??? I will be looking for a move down on very heavy volume (panic selling). This usually marks the end of a wave down. The market is down today, and I believe it will be down again tomorrow (before the holiday). But I think it will turn up at some time next week.
Tomorrow there will be a report on jobs. This is usually a market mover. If it is a positive report (I doubt it!)the market would move up strongly. If it is negative, it will cause the market to go down a lot. This report comes out at 8:30 am. It should be interesting.

Wave Three continues down trend

My philosophy of my trading is based on the Elliot Wave Theory. Simply put, the main trend whether down or up is composed of five waves. When the market corrects itself, it does so in three waves.
Right now we are in a "down" or bear market. At this point we are in the third wave. This can be seen by going to www.stockcharts.com/ and clicking on $SPX. This is the chart for the S&P index.
Today we went through support at 1040 decisively. We ended at 1030. So the downtrend continues. The next support level is at about 1000. So, at that point the market may reverse and retrace to about 1050+. I am not concerned about this and will continue to hold short because eventually, the S&P will go below 600.
Patience is really a virtue when trading as long as you are within the trend. Of course, if you are outside of the trend, you must cover your short. So you must be vigilant.
PS. The Dow Theory gave a sell signal on Wednesday. Many traders follow this theory, in short, when the Dow Industrials and the Dow Transports confirm their trends, it gives a signal. (This has worked for a long time.)

Support broken at 1040

Wow! what a day for the markets. The S&P broke support at 1040. The market is in the early stages of the third wave. The downtrend has a high probability of continuing its downtrend. The next support level is around 900. As mentioned previously, the third wave is the most violent but if you are trading with the trend you can make a lot of money. The 4th wave will be an "up" wave but you have to be alert to be able to trade it. It will also be powerful because it will cause a lot of shortsellers to cover their shorts. You can look at the S&P chart at www.stockcharts.com/ Look at the daily chart and it clearly shows the direction of the market.
I continue to be short the market.

Most people buy a stock and hold on to it. I don't trade a particular stock but choose to buy and sell indexes, such as the
Dow, S&P, Nasdaq, and the Russell. You can short these indexes. The thing to remember about the Market is that it is a game (casino) and you must know how to play it. The guys on Wall Street know how and you must learn how to play in order to make money. Learn the rules!

sentiment and trend

Sentiment expresses the mood of society. When the mood of the country is positive, the stock market goes up. When the mood is negative, the market goes down. What is the sentiment today: unwinnable wars in Afghanistan and Iraq, millions out of work, huge deficits, environmental disaster in the Gulf, workers' pay and benefits being cut. With this kind of sentiment, can the stock market go up?
Krugman, an influential opinion maker writes in the NYTimes today about a Third Depression worse than anything experienced before. If sentiment does determine the trend of the market, it must surely be going down. But this is one man's opinion. Keep in mind that there is also a saying that "the market climbs a wall of worry." There is always an opposite opinion!

The stock market continued its downtrend today, although it was up for most of the day. The Dow, S&P, Nasdaq, and the Russell all ended down.

The markets remain in Wave 3 down.

I trade only indexes, not individual stocks.

downtrending

The stock market remains in a downtrend. We have recently completed wave 2...we have started wave 3. Keep in mind that the third wave is longer than wave 1. It is also a violent wave. Most money is made trading the third wave. The third wave will have 5 waves. The problem is always the same: "where are we?" Check the SP chart which indicates a strong downtrend confirmed by RS and MACD.
Initial resistance will be at 1040. We can expect a bounce at 1040. but the trend will eventually continue down past 1040. If history repeats, SP will go below 600, the previous low of wave 1.

remember there is always an alternate, so be on the lookout for a move that would invalidate the above scenario.

my position at this point is fully "short."