The market sold off hard today but is still above the August 9, 2011 swing low. I suspect that tomorrow we may get a a modest bounce or an inside trading day but then maybe weakness again near the end of the day.
At this time I do not believe the August 9, 2011 swing low will be broken tomorrow. My take is that we trade ‘normal’ tomorrow and then still end up closing just above the August 9, 2011 swing low.
That would set up a possible break of the August 9, 2011 low sometime next week. The most bearish interpretation would be a break of the August 9, 2011 low right at the start of next week.
And now onto the unpredictable… a one day prediction. If you want a one day prediction, here it is. We rally tomorrow north from the open and fill some upside gaps into noon time and early afternoon. Then during last few hours of the day sell off again for a flat close and end closing slightly under today’s swing low but still above the August 9, 2011 swing low. That would be the ultimate bearish setup for early next week in my opinion.
Have a one day prediction for how we close the week tomorrow ?
I am looking for approximately 10 days of downside trading action with a few intermittent rallies but for the most part I am looking for persistent downside.
It looks like 1010 to 1040 is the ideal target for this move. I don’t know if we could sweep under that range on this leg down. Perhaps.
I am watching the RSI closely as well as the MACD histogram because there does exist the possibility of a bullish divergence eventually setting up relative to the early August 2011 decline.
This possible divergence will be key in figuring out when the next sustained bullish upswing occurs.
‘Big Chunk’ moves in the market are usually not of extended duration. During the 2008 plunge in October there was a period of 4 or 5 days that made up the worst chunk of the decline, but the rest was whipsaw and complicated.
I sure would like to see a nice ‘big chunk’ of the decline occur for most of next week so we can get it out of the way. The alternative more delayed scenario is that we drift down next week but then save the real fireworks for the week after.
P.S. Larry Pesavento is indicating that Monday the 26th September is a P-Index day which means it is a very strong astro date that can either serve as a dramatic acceleration day or a turning point day. The way the chart is setup looks like it should be an acceleration type day.