Stock Market Correction May be Underway...Stock-Markets / Stock Markets 2016 Jan 12, 2016 - 07:28 AM GMT
I would be remiss if I didn’t report this observation, so here goes…
It appears that the decline from December 29 may have completed a five-wave impulsive decline in 56 hours (8 days). This matches the time that it took to decline from November 29 to December 14 and is 1.62 times the length of that decline.
It is very likely that this is only Wave [a] of 2. There is a better than 50% probability that Wave [b] may go beneath 1901.10, most likely nearer 1885.00. Wave [c] has a strong likelihood of reaching 1960.00. With these probabilities, it would not be wise to trade more than 50% of your capital.
If you are not a day trader, sit tight. This is only Wave 1.
VIX has also completed a lower degree Wave [i]. VIX has some interesting trading possibilities, since it could decline to its mid-Cycle support at 18.70 or lower. However, that may invalidate the Head & Shoulders pattern, since necklines are not considered very permeable.
This may only be a two-day correction, so any trading must be watched carefully.
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