Wednesday, August 3, 2011

QQQ Flat Correction

I showed this chart on July 21 as a possible outcome for the current correction.  It shows the Qs (Nasdaq 100) in a large flat correction with an intervening upward flat correction for wave (B).  I believe this is the operative pattern for the correction.

The speed of the decline to date suggests that the correction may be over sooner than later, but in any case sometime between mid-August and early September.  As the decline below the June low for the Qs will most likely occur as a 5 wave impulse, the subsequent rally must swiftly regain the midpoint of the correction or we will have to give more weight to the possibility of a larger correction or the resumption of the bear market.

Since the current decline is wave 3 of (C) there may not be good low-risk entry points for new short positions.  It may be best to wait this one out unless there is a pause in the decline for a 2 to 5 days.

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