DJIA Intraday Counter Rally Update!

 


Now that the initial shock of, “The Big Dip” is starting to sink in, a counter rally seems to be in progress. I will work this as a potential wave 2 in Minor degree.   There is a December bull market resistance area which could surprise us and give any bullish run some stiff resistance.  Wednesdays can always be  a good day for turnings, and so far the decline has been taking a break.

This potential wave 2 rally could take the rest of the week to play out, but the odds are that the bigger bearish trend will continue.  Some are calling it the biggest one day point drop in history.  Some of the analysts are also calling Mondays move a “Blue Monday”, which is just a name change from what they used to call,  “Black Monday”, or any other day of the week.

Many talking heads, are looking for a simple 10% correction after which the bull market will carry on heading north.

The stock market crash so far is just a little bee sting and does nothing to solve underlying fundamental issues. Many experts don’t see any change in the fundamentals, so this bull market should be right back. Good luck with that thinking as fundamentals do not change prices, but price shifts change fundamentals. By forecasting a future price move, we know that the fundamentals will change as well.

 

This is the VIX, which made the biggest one day jump in its entire history  as the VIX bears all got trapped again. It’s the VIX that gives a direct visual of the fear injected back into the markets. The VIX peaked out at  the $50 price level, which ended up being just 40 points away from the fear level of the 2008 stock market crash.   Eventually that $90 VIX price level should get exceeded by a wide margin.

The VIX should decline again if we are at a potential wave 1 in Minor degree. Any wave 2 decline with the VIX may not last that long, as fear levels like this cannot be maintained indefinitely.