Whenever a low as important as the November low is taken out the consequences can be serious. We looked at the long term chart and determined that the November low, while important, is affected by the 2002 low which we marked here as 7197.49. The penetration of an important trendline (which these lows are) is always important, but the magnitude of the penetration is equally important. Traders toy with the lines so generally speaking a filter should be used to determine importance. Magee used 3%. So this penetration is not definitive yet.
NOW (emphasis) we are going to do some advanced analysis (if what we say is accurate) or fruitless speculation (if what we say turns out to be wrong). This downwave is now 32 days without a rally of any significance. We think a rally is overdue and Friday might have been a reversal day. There was a late recovery during the day and –note– there was noticeable volume increase. If we were trading we would be buying here. And we wouldn’t be doing any selling — except of issues in confirmed downtrends. As our bear position is of longstanding and the trend is long adding on to the short position here is not advisable. Wait for a downgap or a confirmation of the penetration. Below a longer term look.