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Tuesday, September 6, 2011

Tuesday Market Action

Well, the barbarians in the rest of the world didn't celebrate Early-September-Have-A-Picnic Day, so Asian and European Markets were able to continue taking deep plunges yesterday.

Once again, this is priceless:  "A wave of negative sentiment was unleashed Friday, when a government report said the U.S. economy failed to add any new jobs in August. That caused European and Asian stock markets to sink sharply Monday."   I guess nobody noticed until now that over the past decade, 50,000 American factories have closed their doors, and that over a single 13 month period now lost in the mists of time, over 5.2 million jobs evaporated.  Then again - there was a market collapse in that time frame as well.  Hmmmm.  One might wonder, then, why the market recovered in the meantime, while the jobs never did.

Of course, American job loses have been Asian job gains, so you can clearly see why a lousy U.S. job report would kick the legs out from under Asian markets.

Be that as it may, U.S. stocks are joining their international counterparts in the sewer.  As of shortly after 11:00 a.m., the DJI is down 262 points (2.33%) and the SP500 is down 29 points (2.49%.)

This will likely deserve a chart after closing.


Staying with my wave labels from Friday - though other interpretations are possible - it looks as if wave I ended this morning, and corrective wave II is in progress.  Wave I ended just before 11:00 this morning at 1240.13, the low for the day.  From the 8/31 high of 1230.71, it covered just over 90 points.  Today's action ended at 1165.24, not far from the minimum likely retracement level for wave II.  Possible retracements and ending values for wave II are listed below.

From the wave two top, wave III will have to cover at least 90 points, since it can never be the smallest wave in an impulse. 

On Friday, I mentioned the lower boundary of the up-sloping purple channel from Thursday's post, noting that a convincing break will confirm that wave 5 down is really happening.  Today's low just barely poked through that line by 2 points before rebounding.  I believe the wave form has confirmed the current direction, anyway, but it will be nice to get the confirmation.

Wave II might be close to complete, if it only reaches the minimum retracement.  If it extends higher, then it might last a day or two.   Wave 3, when it comes, should be quite dramatic. 

Update II:  Here is some longer perspective.  H/T to CR.

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