This brings the correction into force, but don't think for a second that it will be straight down.
Expect a lower opening tomorrow followed by a rally attempt that should retrace a full 50% from the openings low to the high set on 12/11. There is going to be some great trading opportunities tomorrow as I expect a very volatile day.
However, the possible rally of Wednesday should be followed by a continuation of the decline.
I will be taking advantage of the strength by finding some very short term shorting candidates, but alas I get ahead of myself. We still need tomorrow to fit the pattern as laid out above before anything else takes place.
Regardless of what outcome that finds its way into the market we are in a corrective mode.
Targets for the correction basis the S&P 500 cash are 1465 and 1451.
From these levels we should see a very abundant rally for the rest of the year and a very strong January. I have a target of 1683 for January 2008 which is quite ambitious, but very doable.
The chart below is in response to the many emails I got about being so cautious in the face of higher stock prices, Sometimes the daily chart is just not enough to disect the short term trends. For my intermediate term work I use the Daily, 60 Minute and 30 Minute charts and need all three of them to confirm. As you can plainly see this was not the case.
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