Tuesday, September 1, 2009

We got our signal...now we watch

Price confirmed my preliminary count of a 1-2, 1-2 this morning. After price rallied to the .786 retracement of our 2nd wave down, the sellers came in and the bulls got slammed...hard. The trendline is now broken. All we can do now is watch for confirmation signs that should come if this is really the start of Primary Wave 3.

My general rule is that an impulsive wave should always take out the previous pivot. So, if we are in an impulsive wave, I would expect us to break the last pivot at 978 before any significant close above the hourly 8 SMA. I'm also looking for a move to 950 before any significant close above the hourly 34 SMA. That would absolutely put the required fear into the bulls and be our confirmation that the bear is back in force.

I'll start lightening up on my sept put positions from 980 to 950.

Should we move back above the hourly 34 SMA before reaching at least 978, then I will be looking for higher highs.

1 comment:

  1. Well done Rich. Good call.

    I agree with your ST outlook.