There was some selling today, but the indexes closed well off the lows and above support. The McClellan Oscillator remains above zero, the Absolute Breadth index remains well above 60 (a level often associated with market turns), and the High Low Logic index only closed above 1.00 one day and has since fallen hard suggesting that as severe as the selloff has been it may have just been a very sharp correction in a still ongoing cyclical bull market. The foregoing statement aside, I suspect the correction will extend well into the fall.
At this point it is too early to determine what form it may take, but the pattern for the Qs, an expanded flat correction, suggests a flat combination. If that turns out to be the case, the current rally should advance to at least the 62% retracement of the decline, which for the Qs is 56.05. The 50sma is currently at 56.16, so for practical purposes, a retracement to the 50sma or 50ema is the most likely outcome.
Once complete, we would expect either a long drawn out triangle or a zigzag to follow lasting the same length of time as the flat. The flat was one week shy of 6 months long. If the current rally ends at the end of August, around the full moon on August 26/29 e.g., then the entire correction would end somewhere around mid- February. In other words, we may have a long time to go in this correction, so don't get your hopes up on the long side.
Alternatively, if the Qs manage to sustain above the 50ma, then all of the above may be irrelevant.