Written by William Kurtz
My note to you last Friday evening included charts of the Dow Industrials Index, which is apparently at, or very near, the point of topping and reversing. I want to show you now that the Dow isn’t alone in that exercise – so is the S&P 500, and so are the Russell 2000 and the S&P 600 SmallCaps.
In the chart of the S&P 500, we see that prices declined from the mini-peak in five waves, 1-2-3-4-5, in the yellow boxes. “Five waves” means that a five-wave series is complete; and that it is
the end of a new wave in the trend of the next larger degree (shown as “1” in the purplish box at the bottom of the chart). It is also strong evidence that the new trend is DOWN.
After the five-wave series completed, we could now have expected to see a three-wave “A-B-C” upside partial retracement – and sure enough, there it is, shown in the blue boxes. The top of the “C” wave would also be the top of “Wave 2 Up” in the trend of that next larger degree. We see that, too, as the “2” in the purplish box.
We also note that the upside (countertrend) bounce retraced EXACTLY 78.6% of the prior decline. That is a normal “stopping point” for a “second wave.” Our expectation now is that the next wave will probably be “Wave 3 Down,” which will be a strong wave that will take the S&P 500 far below the bottom of the “Wave 1” which is shown at the bottom of the chart in the purplish box.
Please stop for a moment to contemplate that: “far below.” This “Wave 3 Down” will mean business.
The corresponding bounces in the S&P 600 SmallCaps and in the Russell 2000 carried them to the 61.8% retracement line of their previous declines. This, percentage retracement, too, is a normal and expected stopping and reversing point for a “Wave 2 Up.” These retracements in the Russell and in the S&P 600 support and reinforce the suggestions in the Dow and in the S&P 500 that prices are about to turn down. Further, the bearish “Shooting Star” reversal warning patterns in the Russell and in the 600 add weight to our observation that prices probably are about to head Down, across the board.
If that probability comes to pass, as I believe it will, the next days and weeks are going to be exciting times, as we watch the stock market implode.
We ought not be in the path of that oncoming locomotive.
Author’s notes on his services
The weekend edition of my “StockWatchSentry” is ready for delivery to you. I have pinpointed several S&P 500 stocks which I think are especially vulnerable in the event of a downturn. If you own any of these stocks, or if you have a substantial portfolio regardless of whether it contains any of these stocks, you ought to be thinking about protecting your investment, not a week from now or “next week” or “I have to get Christmas out of the way first” or “sometime,” but right now.
“StockWatchSentry” reviews every single S&P 500 stock individually, every weekend, with a brush-up on Wednesday evenings. There are several stocks on the new list that I think are “sitting ducks” for substantial damage in a downturn. I will send you that new list, and weekly issues and Wednesday evening brush-ups thereafter, if you will order ’em up at www.CandlesticksOnSteroids.com/StockWatchSentry/
And, in order for you to stay even more current, in my “MarketPeek” service I monitor the stock Indexes constantly during market hours, and report to you on them twice a day – once during market hours, and again after the markets have closed – every trading day. As I think you know, I specialize in spotting Reversals of Trend very early. That is exactly what MarketPeek does for you – it spots incipient Reversals, even before the Reversal Pattern is complete. It helps you to join a new trend (whether it’s expected to be a long one or a short one) in time for you to jump aboard to your best advantage; and, equally important, for you to jump out before very much damage, if any, is done. Of course, “Special Alerts” are issued whenever market developments are so important that I think you need to know about them right away.
If you have a substantial portfolio to protect, or are responsible for managing others’ portfolios, you ought to have this constant monitoring working for you while you are busy doing something else. Just don’t stray too far away from your MarketPeek computer inbox during the next days and weeks, because I think I’m going to be keeping it busy.
Get “MarketPeek” working for you right away. Don’t put it off. Delay can be very hurtful if you put off decisions now.
“MarketPeek” is waiting for you at www.CandlesticksOnSteroids.com/MarketPeek
Get “MarketPeek” rolling into your inbox now, while you’re thinking of it. This market could turn so fast now that, if you don’t get ready for it, you will be kicking yourself for a long time. Don’t let “2008” happen to you this time around. This downturn is going to be worse than “2008.” I can’t keep you out of trouble if you won’t let me.
So get “MarketPeek!” Click here right now: www.CandlesticksOnSteroids.com/MarketPeek
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