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Two-Edged Sword

May 26, 2011 3:47 PM ET
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aarc's Blog
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The Fog of War is getting a lot thicker when the SnP500 made a left hook yesterday before the closing time on the 15min chart forming an a-b-c run up (labeled as red b-wave) instead of the expected i-ii-iii-iv-v needed for a reversal pattern. 

Since I am long SSO from the $52.53 level;  it is worth looking again how the bears may be interpreting the wavecount after the initial attempt by the bulls for a recovery rally:

-   imageshack.us/photo/my-images/163/snapsh.../

As of this moment, Spx may or may not test the Major Resistance with the final outcome still unknown right before closing time today.

For trading purposes, it is imperative to be a lot more cautious now since the possibility of a Spiral Meltdown can happen at this stage and the 15-min wavecount are not helping the bulls.

I sold 1/3 of the SSO buys (bought at $52.53) at $53.56 as a precautionary move.  Better to bank some profits while the going is still good.  Hopefully, we don't gap down tomorrow.

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