Thursday, December 17, 2009
Correction Underway - Again
On Monday I said, "If am feeling this emotion, I am sure there are many others. I have felt this before, and usually it means there is a top at hand." Yesterday the Wilshire 5000 Index made a new rally high right at mid-day and has since fallen in a very clear 5 wave impulse move. At this point, we can expect a retracement rally. If it is a simple move, it could end tomorrow or early Monday. If it is a complex move, it could last most of next week. However, I expect that the selling will accelerate the week after Christmas.
Afterhours, RIMM and ORCL both beat earnings expectations, and RIMM is up substantially, but that will probably not be enough to keep this correction from gaining steam. Time is an issue though as I am projecting at least some type of low around January 4. Whether or not that is the low of the correction cannot be determined yet, but I am expecting that we will at least see a retest of the November lows in the Qs and a move to 9700 to 10000 in the Dow before this correction is over.
What I have been pretty clear about is that I do not believe that yesterday's high was the top of primary wave 2 and that this is the start of the dreaded wave 3 armageddon in stocks. A low should be seen in January that will be the last best buying opportunity for some time, in my opinion.
Posted by R. Craig Pritchard at 5:53 PM