Thursday, May 22, 2008

Pullback in Progress

It's unusual to have more than two big down days in the US market recently without some sideways or slightly up action. So expect smaller falls or some rebound Thursday and Friday. The model is forecasting a new uptrend starting on Tuesday (after Memorial Day), though that depends on the stochastics staying above 20 which would require a little rebound in the next couple of days already and what non-US markets do on Monday and Tuesday. My most likely scenario is that an ABC wave is nearing completion which started a couple of days into the month and that what we'll see in coming weeks is more sideways action with three part waves up and down. But of course, anything could happen. The analogous correction in 1991 was very sharp with less down days punctuating the bigger down days:

Something like this is a definite possibility if there isn't much of a bounce in the next 2-3 days.

No comments: