In the last few days the DOW took a big swan dive followed by another wild ride up, which may have completed this morning. Now we have to see it the recent peak will hold and then push lower and make a downside breakout. The majority are working on what the call key support price levels to be broken, but the price does not determine support. It is the pattern that supports a price, and the problem with that is the pattern is really ever that clear.
We have already been over on the bearish side for most of the month of March, and they will not declare a bear market until it retraces about 20%.
Little do they know that the this market could ultimately drop by 70 or even 80% in the next 2-3 years, so support price levels will have little meaning in the log run. Even when we get to an “A” wave bottom, support will only be a short term bet at best. The best turnings are always the turnings that force the majority betting in one direction, and then forcing them to bail out, and go the opposite direction.
Very few traders have the drawdown capability to stay in a huge “B” wave rally, so most of these turnings I like to see will contain lots of fear.
The VIX would be in a vertical move and gold stocks may be overbought by a large degree. We still have lots of time before we even get close to this “A” wave in Primary degree, so anything can still happen. I still favor a flat in Cycle degree as wave 2 in Cycle degree looked more like a zigzag.