We have spoken frequently of the alpha-beta-gamma-zeta pattern (http//www.edwards-magee.com/ggu/alphabetazetawaves.pdf), and the present pattern leads us to speak of it again. We have labeled the waves here , though they be short enough and compact enough to be called wavelets. Today was the gamma wave (or in some notation the c wave.) Bears and Chicken Littles finally got what they have looking for for months — a downward biased market. We suspect their joy will be short lived, but only time will tell. Price is right on the top of support right now. Should it fail to hold and the wave bottom of July be pierced we would be in a dicey situation. For the moment we think we should be looking to add on in the present situation or even do a short term scalp trade. We have not drawn the zeta line here, but will shortly when we see it clearer.
We see no indication that this market is finished, and although taking bitter medicine at the moment we expect the market to pay us back.
The weekly SPX chart is displayed. Only a gambler would short this, or claim an end to it. The game is still on, subject to caution in the present pullback.