Thursday's Market

Yesterday I said:

It will take a convincing break of 1170-1175 to suggest we have finished with wave 4, and a plunge through the lower bound of Monday's up-sloping channel to confirm it.

We've had all of that, and more in the first half hour of trading today, with the SP500 hitting a low of 1134 and now quivering around 1140.  The DJI is down 4.2%, the SP500 down 4.7%, and the NDX100 down 4.9%.   Exciting action - and not in a good way.  More later in the day.

Update (after closing):  Another mostly sideways day - except for that uncomfortable 4.7% drop in the first 40 minutes.  Another way to describe the rest of the day is   "dead cat bounce ."  After being repelled by  1149-1150 four times between 11:50 and 12:23, the action for the rest of the day was contained in a slightly down-sloping trend channel.  Though the close was at 1140.65 - close to the mid-range of activity post 10:00 a.m., that is now the top of the channel, and the daily low of 1131, the bottom of the channel, occurred only 13 minutes before the close.  If my read of the sub-waves is right, there should be a drop of more than 20 points in tomorrow's early going (and perhaps a 5 to 20 point rebound intraday) before another drop to a new post-July low (under 1101.)  For now, I see no reason to amend my expectation of a temporary bottom around 1000-1050, challenging the lows of Summer, 2010.

Ugly, yes - but reality often is. 

Update 2:  EWI is giving away the next chart in emials and on their website, so I don't feel too bad about sharing it with anyone who might not have seen it.  The point is that once we break through the late naught support values - essentially the bottom of a decades long trading channel - and then whatever support the 2001-2 lows might offer, there is no support at any level of trend between here and oblivion.

Update 3: At Naked Capitalism, Yves Smith provides some equally gloomy international perspective.

  .U