NYSA update: more downside maybe, but certainly not required.

The NYSA did not make new ATHs like the SPX and DOW did. Instead, it retraced to about 76.4% of the previous move down and then went on to make new fresh lows. Bears are salivating, bulls have given up all hope. Interesting to see how sentiment just 3 days after fresh ATHs on the leading market indices can change (too fast too quick!?!?) In essence, all the NYA has so far done is make 3 waves lower, which is corrective and can/should therefore for now be counted as an abc. In addition, price has found support at 10,800 and traded entirely outside the lower bollinger band. Such price action is, at the very least, often followed by a day or two where price moves back inside the bollinger band. It simple has dropped too much too fast. Note also how now price is OverSold (OS) on the daily, and extremely OS on the hourly (not shown). Last but not least, price has now retraced a little over 50% of the entire prior move up off the early August low. Such retrace is also fairly common for a 2nd wave. Not until price moves down in clear larger degree 5-waves and breaks below that August low, must we consider this as yet another correction. Yes, the past 3 days have been red, very red. BUT, c-waves are vicious relentless waves, and this has so far all the hallmarks of it. That said, the NYA can, ideally, drop to 10,700 before -at least- a decent bounce, but it is not required. To counter my story, I’ve attached a chart with some bearish thoughts instead on why the market can still head (much) lower. The dotted line shows where the 1.618x extension of wave a would be (10,700, right at S1), which is typical for a wave c. Right now price is at about the c=a extension. Note also that when this decline becomes eventually 5-waves, then I am all aboard the bear train and will short the next pop, but until then…

nyse 09232013



One thought on “NYSA update: more downside maybe, but certainly not required.

  1. Pingback: SPX and NYA update: irregular flat wrong, possible expanded flat bottomed at 1968. NYA found support at 17700ish | Intelligent Investing

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