The Market Popped & Then It Dropped

As I had expected yesterday the ending diagonal pattern played out. It can be seen clearly in the Dow 30 5 min chart below. While it is too soon to be certain, it does appear that today's action will mark the top of the rally that began on August 27. We will need to see a 5 wave impulse down at one larger degree of trend to confirm, but the initial move down should be fairly swift. It may be followed by an extended attempt to retest or at least approach today's high before greater downside acceleration occurs.

Longs should be extremely cautious at this point and some profit taking is warranted regardless of you intermediate term views. Even if the bull case wins out, lower prices should be seen in October before the market can advance further.