The market sold off right where we thought it might. However, given the 92.50 point drop from 6/21- 6/29, I was personally looking to add to my short positions where wave C=wave A (1048.5) or where wave C=1.618 wave A (1056). (See earlier - Pre Market and Mid Day Post charts). It was a frustrating day to say the least. To add insult to injury, the late day sell off at 2:30 EST was triggered when
Moody's said that it may cut Spain's Aaa local and foreign currency government bond ratings by as much as two levels after a three-month review. The market remained under pressure for the remainder of the session closing at 1024.5. The lower close brings the entire wave count from 1127.50 into question. If wave i (circle) did not end at 1030.25, then wave i may be an extended 1st wave of wave 3 down and is still subdividing wave (v). I'll attach a chart for this viewpoint. A second, low percentage count would be that the small bounce that terminated at 1043.75 earlier today completed wave (ii) and that wave (iii) of 3 is underway. Both views offer lower prices for tomorrow's trade as long as the pattern doesn't complete overnight. But let's me smart here! Given the decline we have seen over the past few days, a larger wave (ii) would be expected when wave i (circle) completes. We must respect that possibility at this point in the way structure until proven otherwise. Use of a protective stop just above 1043.75 would allow a trader to embrace a greater bearish case. Any break above the stop would mean wave ii (circle) is unfolding.
Best of Trading!
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