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Thursday, March 25, 2010

Bearish? Hell Yeah! ... But Is This The "Top"?

First things first. I am still bearish, very bearish. I am still very short (painfully so and deep in the red) from the shorts I established in mid-February. But before we get to the big picture, lets talk about the near term (next couple of weeks)

Minor Degree Wave up is Done (IMO) and Now we have *at least* a Minor Degree Wave Down

Count for this stupid, low volume, shitty breadth, generally annoying rally. And I argue it is not impulsive: Counts and Structures Within This Rally

The McClellan Oscillator has been forecasting a trend change like I was pointing out in Mr. Plow, Rhizome and Tubers. The trigger MAs have definitively turned down and crossed and the trend MA is flattening

The trendline chart was showing serious weakness. One the orange trendline was broken, it was never really recaptured. Now we have at least a lest (and break I suspect of the blue trendline)

What this is telling me is that the next few weeks will be DOWN!!

... But is it the "Top" (of P2)?

It could be. Until we see 5 clear waves down in a impulse structure, with acceleration down on the 3rd wave, that is absolutely an unambiguously discernible on a 60 minute chart, there will not be a crash. That is the opening salvo. And even if we do see this, it DOES NOT guarantee a crash. But there is *no way* a crash will commence without this pattern. P3 is an impulse, and so the first move of P3 *must* be impulsive.

So if we see this, then I will be a *very happy bear*

.... But, my gut says the next move will not be an impulse. Here is the large count I think we are in. I think the next Wave down is Minor B of Int Z of P2.

There is another reason for why I think this. The NYSE Cumulative Advance/Decline Line has not been diverging. By diverging, I mean that as a measure of the internal strength of the wave, we should be seeing *weakening* internals. The A/D line should be making lowers highs near the top as price makes higher highs. That would be clear divergence.

Neither the A/D Line is diverging, nor is the High/Low line. Nor is the TRIN in any meaningful fashion.

But an indicator telling is we are getting close is that the daily breadth *spikes* are getting smaller and more infrequent. This move is *very* tired. ... But not dead yet IMO.

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