And the waves roll on down, and down and…

The present downwave is now 38 days long without any significant upwave, or even any signs of an attempt to rally.  We do not exult in having been correct about this market.  The real personal pain our fellow citizens — in this country, and our fellow humans in all countries– are feeling leaves us in no mood to celebrate.  It is satisfying to see the establishment which has so disrespected technical analysis reap the just rewards of their “buy and hold” and “value investing” and “whatever else” strategies.  But even for them we have some sympathy.  Everybody has been hurt.  And they will probably be hurt some more judging from the chart.

The present wave, at 38 days, has broken the back of the panic trading range.  The wave which broke the back of the trading range from August to October 2008 was 44 days long.  These long waves gather such momentum that they gather a life of their own.  The present wave is not finished.  It could well finish with a panic day.  And from the look of the chart we would opine that the market is going to work its way down to 5800.  Not that it will stop there.  Remember, that while that is an educated opinion it is still an interpretation.  Tactics are always determined by the immediate situation.  Are new add ons to short positions in order?  Perhaps.  But with tighter stops that on old positions.  But certainly if there is a rally here we would look to see it exhaust itself and then add on.  The chart marked up:


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