The trendline is from mar09. Broken. The upper moving average line is the 50 day SMA and the lower line is the 200 day SMA. Broken. We record them because many non technicians consider them important. What is really important here is the trendline — and the growing volume. The more we look at this the worse it looks. In our personal accounts we have been near perfect hedged, but we lifted the hedge today expeccting a short term bounce. Very short term. Depending on the rest of the week we may just go outright short.
This is not just a squall. This is a typhoon. We have repeatedly pointed out that this downwave is taking place within the context of a historic bull market, so it is not impossible that we will see another wave up but right now the thing to do is reef the sails.
As shown the SPX is over the New High stop, the chandelier stop and the rule of seven target. It is possible that the wave low stops will arrest the landslide but it is also possible to exit or hedge and reenter later — if justified.