The general market gave 3 red candles over the last 3 days (the last 2 are great long candles). It had been 3 great trading days for me. I started playing ES (S&P 500 e-mini futures) again 2 days ago after a long break. Many indicators are already showing at least a short term correction is in process.
The market is long due for correction and is just finding an excuse to correct itself. The excuse for now are the tightening of bank lending in China and U.S. President Obama's reform of the US financial markets.
The big question is whether this is the big correction of at least 38.2% Fibonacci level. That will bring the DOW to around 9,100 or below. A great correction will bring the DOW to at least 61.8% Fibonacci level at 8,100 or below.
Currently, the DOW 30, S&P 500 and NASDAQ Composite indices are resting near or at the support line (see the trendline drawn on the charts above) - around the October high. The next milestone is for the major indices to break and stay below November 2009 low. Following that, we should then track the swing lows and the Fibonacci levels of 50%, 61.8% ....... If this is the Correction, we could expect the Correction to last for at least 2 mths - depending on how low the market wants to correct itself.
Cheers !
PersianCat (Millionaire-in-progress)
3 comments:
For Dow to close below 9400 and for SP500 to close below 1020 will tilt the current uptrend into bearish trend again. I doubt the fibonacci retracement level of 38.20 is the critical point here. If it ever breaches the above level i mentioned, the fibo point you stated will have very weak significance to hold the uptrend in an important manner anymore.
In fact, if the market breaks below and remained below Nov low (which is above your figures mentioned), the current uptrend is already broken. My point is that for the downtrend to be sustainable for a while, it has to break and remain below the 38.2%. Otherwise, the market might just bounced off from the 38.2% Fibonacci.
It is mostly due to US politics. If Democrats had won the Massachusetts elections, you would have had worst trading days.
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