Mini DJIA Crash Or Correction?

The markets are still soaring as I post, but I expect this rally to run out of steam by late this week or early next week. Any market move that was this unexpected, certainly unnerves the weaker investor, especially when investors just finished stuffing their RRSPs in January.

They paid no attention to how over-bought the market was as they do this just about every January. Many are calling it a correction in a bull market, and if this is true, then the DJIA must eventually push much higher and go back to breaking new record highs.

The longer it takes to push to new record highs, the less confident investors become.  The backlash to the initial drop is still playing out, but we are getting close to a previous inverse dip so this can produce some stiff resistance. This could be a wave 2 rally in Minor degree, and would be part of an initial zigzag in Intermediate degree.

The VIX is already crashing from a peak of $50 and is fast approaching the $21 price level. There still may be more downside to go with the VIX, but if this bear market is not over, than the VIX,  should crank back up again.  Sooner or later the VIX should soar above $90 again, which was the end of the 2008 bear market.

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