The selling today is on light volume so far, but it does show some impulsive qualities. For the Qs, coming under last week's low of 54.21 and closing under the November high of 54.04 would go a long way toward initiating a correction. The corresponding levels in the Dow and SP500 are 11518.44/11451.53 and 1251.48/1227.08, respectively. I particularly like the look of the decline in the Russell 2000 which only needs two more waves to complete an impulse down from yesterday's high on the 5 minute chart.
I would not be surprised to see an initial impulse down followed by a 2nd wave rally into Friday to keep the opening 5 days of the year positive for the bulls. This would lead to more intense selling next week.
The markets are wedging higher on declining volume from both the November and July lows. Even if they manage to eke out another high next week, rising wedges almost always end badly. If my hypothesis about a B wave is correct, and if the rally from the July 1 low is a rising ending diagonal in wave [c] of B, then look out because the July 1 low will be retested by early to mid March. This is clearly not the consensus view, but it is one that should be appreciated.
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