The nature of today's action was sufficient to rule out the alternate count I posted yesterday. It appears that wave A up is complete and wave B down is underway. The rally is clearly corrective as wave A is a double zigzag and so far wave B down is showing corrective qualities as well. I expect that we will see sideways to down action for tomorrow into Thursday with a final push up in wave C of (B) Friday and Tuesday next week. Thereafter the correction should resume in force.
The media fanfare aside, today's rally was rather unimpressive. Being day 3 of the rally as well as less than 1.7%, it did not qualify as a follow-through day either. It will be interesting to see if we get an IBD follow-through call on Friday or Tuesday. If so, I believe it will be a false one and traders should wait for additional follow-through to prove it should it occur.
I will be going short a half position in the Qs if it approaches its 50dema. I will add to the position on a resumption of the downtrend and exit the position near a measured move target where wave (C) equals wave (A). The only logical place for a stop is above the January high. While not ideal this does give an almost 2 to 1 reward to risk ratio.
I will be exiting all short positions as we approach the bottom of wave (C) and looking to go long sector ETFs in my core positions.
I got some nice help today in my GME short position with a downgrade. Although I originally calculated a target below 12, I now believe it will bottom near term just below it's November 2008 low as the latest down move does not appear to be impulsive. It is probably a B wave of a long drawn out triangle or flat. So I will be exiting that position as well as wave (C) comes to a close. Only a sharp move on volume below 15 would alter that outlook.