This is the 10% correction I have been waiting for though I don’t expect a big drop of 460 points in a matter of short hour. It was indeed a panic mode in that short time frame.
A combined worries over ‘Ebola fears’, deflation, ongoing the Euro-zone debt crisis and some bad U.S. economic data (retail sales, the Empire State Index and the producer price index) are causing investors and traders to run for cover.
The bloodletting in the afternoon, pushing the Dow down more than 400 points and leaving the DOW on record for the biggest one-day percentage drop in three years, while erasing the S&P 500’s year-to-date gain.
Technically, we see a whipsaw everywhere in OIL, GOLD, USD yesterday and also in global markets. It all happens on 15th October- the critical reversal day based on Gann’s Cycle which was posted 1 day earlier before it happens.
Where to from here? For some time now, I have been warning of a at least 10% stock market correction. Here we come but the great opportunity of buying time is awaiting us. The long-term bull market in stocks is not dead and the Dow will explode higher to over 30,000 once this expected correction is over. Questions are how far lower can it go and When is the deep correctio to be over? In fact, even if it goes lower to 14000-14500 in DOW, we can still make money by focusing on ‘SHORTING’. This is reserved for the members.
On short term basis, it seems 15th October is the critical reversal day. Look at Transport Index - the Transports may have bottomed on Monday and also rose today, Also note that TRAN is often considered as the lead indicator and lead the market. Probably, that may be the straw in the wind that SPX DOW NDX is turning/rebounding. Please note that panic bottom is still not seen as “Trin” indicator is still below 2. Therefore, I still expect a new low after this rebound. Also Long term trend line in TRAN has not broken yet –the bull is not dead yet. In any case, we need to allow more correction to complete.