The initial leg of the decline remains incomplete. It may bottom sometime this week, perhaps even tomorrow. The decline in the SP500 looks the most impulsive and I will be using it as a guidepost for the correction. I believe I have resolved the count for the Qs, but I want to wait and see how it looks when the SP500 completes wave A or 1 down.
The Qs closed at 42.34 and below the trendline from the March low (around 42.50 today), which is another strong indication that the trend is now down. Volume was higher on most indexes, so it is hard to imagine that IBD will not call this a "Market In Correction" in tomorrow's edition. Support remains at the 50demas and October lows for most indexes, but the Russell 2000 and Dow Transports are below their 50demas and rapidly approaching their October lows.
Other indications that the correction is gaining momentum is the recent reaction to earnings and guidance by BIDU, SOHU, ILMN and APOL. These stocks have been crushed. Also, AAPL closed below the $200 mark on higher volume today and other market leaders are being sold hard, e.g. FUQI and DTG. This is why I highly recommended selling into the new rally highs in September and October. FUQI is down 33% from its September high. It will take weeks to repair the damage.
An interesting development today was the traditional McClellan Oscillator closing at -280.36. Such low closes have often led to sharp rallies in the past. The rally this time may correspond to wave 2 or B and will likely be a bull trap. As long as the October highs are not exceeded on higher volume, this would be a good opportunity for those who have not opened initial short positions to do so. Again, keep in mind, that I am not expecting an impulsive return to the March lows as many are calling for, but rather a choppy correction to the July lows. Adjust position sizes and stops accordingly.
At this point there is little doubt that the correction is upon us. The only question that remains is how long and how deep. In my opinion the probable answers to those questions are until December 2 to 24, most likely around December 9-11+/-, and down to the July lows. This is certainly not a time to be buying stocks, although many will try.