When a apparent 3 wave correction fails, it usually means that it was not a 3 wave correction, but a 1,2,i,ii setup. This appears to be the case today as the chip sector is leading the markets lower. I may be going out on a limb, but I believe this week's highs in the major stock market indexes will mark the high of the first leg of the rally from the March low and we are now in a correction that will lead to the 10 month cycle low in December or January.
The primary evidence for this is the lack of new highs in the small caps, semiconductors and financials coupled with the Qs coming decisively back under its October high this morning. If the current volume run rate continues, the Qs will have the highest volume of the last 3 months on a down day.
I will be looking for a completed 5 wave impulse pattern down on the 30min/60min charts and/or a daily fractal sell pivot, macd sell signal, IBD "Market In Correction" call for confirmation and a chance to add to index short positions for a retest of the November lows and a likely test of the 200demas. Of course, a reversal a breakout to new highs would seriously derail this viewpoint.
I am expecting that gold will test support at the October highs around 1050 to 1100 before moving higher.
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