Oct 3, 2014
Let us recap: - EW - W-X-Y or impulse.... we should be in 3 of 3 the strongest wave and instead closing around the bottom we have strong intraday reversal. The impulse is very doubtful. - Cycles - at day 39.... and we have bullish intraday reversal close to a 40 day cycle bottom. - Technicals - looking bad at the moment no sign for a reversal - Market breadth indicator - divergences and at oversold levels McClellan Oscillator/advance-decline, VIX reversal - Bullish reversal candle - TomDemark buy setup finished - DAX three legs lower with the same size - looks like triple zigzag So I do not know if I am biased but my feeling says this is a bottom.... with corrective move lower. Two options - this is either wave 2 of ED or part one of a much bigger correction. Even if we have a bottom the technicals look bad and the indexes moved much lower than expected - look at a weekly chart. Taking this into account the main scenario is lower high and this is the first leg of a bigger correction. If next week is very strong and wipes out completely the loses from this week than we will think about 2 of ED and higher high. How to trade - it is prudent to wait for a higher low... bottom/top fishing is never a good idea. If the next move lower can not take out the low I am long. Given the strength lower I think we will have a chance for a decent entry.