The good news is that it appears that the Qs are working on a double zigzag correction. The pattern on this correction is 3-3-3. Today's rally completed 3 waves up from the May 13 low.
The bad news is the poor close on the Dow and the financials coupled with HPQ being down afterhours strongly suggests that wave c of this 3 wave correction will get underway tommorrow. The downside targets are 32.36, 31.63 -31.83, and 30.49 to 30.89. I suspect that we will see a strong test of 31.63 at least.
The good news is that once this correction is over, we should see a strong move up in wave C of of (A) of X (my preferred count) to at least 37.50 and quite likely 40 or higher.
The financials look like they are ready to correct sharply in wave c of B of a flat correction. We can count 5 overlapping waves up in the XLF which means there will be at least one more up move to complete the advance, but probably from below 9.00. There I am tightening my stop on the UYG to 3.90. I given a little back, but it wasn't clear until today whether or not the financials would consolidate sideways before moving higher or enter a deeper correction.
Gold, oil and nat gat look like they will continue to advance during this correction. The UNG has corrected 50% of its advance off the April low and should turn higher or consolidate from here. Gold and oil need to breakout above last weeks high to continue their uptrends.
I am tightening stops on my index long positions, exiting a couple of stock positions and will hang on to the best stock positions during the remainder of this correction. I will look to re-enter index long positions on a clear sign of a reversal from support.
The expected dates for the low of wave c are 5/22, 5/26 to 5/29. The 55 day low from the March 9 low falls on May 26. We usually see a low within +-2 days of this important 10 month cycle subharmonic. This extends the time band for a low from my previous projections, but we have to adapt to the market as it unfolds.
The rest of the week will be very busy. My second son (I have five sons) is graduating from high school tomorrow. I have the LEED-NC AP test (Leadership in Energy and Environmental Design) on Thursday, and Friday I just need the day off. So, my next post will probably not be until Monday evening May 25.
Have a great memorial day weekend.