Right now we’re at a critical Trend crossroad.
Very Short term:
Key Level: 983.25
Below Key Level down to 965.75/966.00
Above Key Level: up to 999.00/999.25
I don’t see reaching 999.00/999.25 because our compression/velocity vectors (angles) tell a different story, which is; we have an Open Apex Vector at 994.25 meaning at 994.25, we cancel out all immediate upside compression.
If we continue downward from current levels expect a profound bounce at 963.50 and in return cancels out all immediate downside compression and adds new compression to the upside. In short a move up from current levels is Bearish, a move down from current levels is bullish.
Currently we are trading within the confines of these patterns: C/T
Down Price Target: 926.00
Up Price Target: 1024.00
Down Price Target: 963.50
Up Price Target: 1042.25
These 2 patterns are sub (minor) patterns within the confines of 3 larger patterns. Of which 1 is a major and 2 are minor within the confines of the major pattern. The reason we need to review these patterns is due to the fact the wave structure of the decline from 1015.75 to current levels doesn’t resemble in any way shape or form the previous (upward) wave structure from 865.25 to 1016.00. In addition the velocity, volume and price movement of this decline doesn’t match with any declines since 662.00.
Last night the market opened with a gap down (regular gap) and sold off 26.00 points, in addition the overnight session volume was double the average. Gaps are the best indicator for a trend change.
What concerns me is this, the last 2 moves down to new lows (985.75 and early this morning to 980.25) were both on the overnight session. Not the regular trading session. All recent new highs were on the regular trading session. In order to confirm this move down is not a fluke overnight sell off; we MUST make a new low during the regular trading session, not the overnight session. In the event we confirm this trend change with a new low during the a regular session, the price target on any trend reversal initiated by a gap, is closure of any previous gaps.
In our case we have an open jump gap at 900.75. A simple correction before the next leg up does not close open Jump Gaps. Only a complete trend change, closes a Jump Gap.
Therefore the next down price target is 950.25.
950.25 doesn’t fit in with the (corrective) time frame, the potential correction is a 28 to 29 day ordeal, from the high at 1016.00 from 8/7/09.
Which means only one of two things.
This is not a correction, or this move down from 1016.00 is not correction but instead a trend change. Never the less as such the first minor low will be 12 or 13 days after the high at 1016.00 on 8/7.
It’s still too early to determine if 980.25 is the short term bottom. If so; we must retrace back up to 996.75 (potential short term top) before heading back down lower. This correction is 13 to 39 days early in regards to the time cycles, which opens the door to various different rooms, only once we’re inside the door (new low during the regular session) we’ll be able to know which room we’ve entered.