Today was a shakeout day. It will serve a good purpose as bearish sentiment has been rising even in the face of the recent rally off of the July 1 low, and the selloff today should reinforce that sentiment. I don't expect that next week will be smooth sailing by any means, but with the low in the Qs today at 44.30, just above the cited 44.00 to 44.27 support zone, I would expect we will see a positive day on Monday. The MACD remains on a buy signal as well as IBD, so there is no reason to rush to the exits.
GOOG behaved pretty much as expected. Again, I would not be surprised to see it find some support early next week. BP has finished the first leg of its 4th wave upward correction. It reamains to be seen what form the correction will take, but a triangle is a good bet.
The action we are seeing so far is consistent with a B or X wave. I know Robert Prechter is putting out a special report this weekend. I haven't seen it, but if I had to guess, it says something like a sharp 3rd of a 3rd breakdown is dead ahead. I don't mean to be disagreeable, but I will wait for more concrete evidence before positioning in that direction. So far, this year the markets have pretty much followed the script for a mid-term election year as can be seen at seasonalcharts.com . Even the current selloff is right on cue, so I am more inclined to think that the current rally has more to go.
For a clear elliottwave short setup, look at gold. Gold is ticks above from completing a clear 5 wave decline from its 6/21 high. After a brief rally, further downside should carry gold down to at least the 1029 to 1045 zone. At that time we can re-evaluate for further downside potential. The GDX is breaking down ahead of gold and may be a better way to trade the short side.
Patience is key as the difficult trading environment continues. There will probably be short opportunities this fall, but it is too soon to position for the downside right now.