Roughly speaking the above picture represents our preferred interpretation. It is an initial 5-wave leg down of about 3200 points. We are presently well into the first rebound which , at 62% would carry this wave 2 to 25300 or so. That is also where a 4th wave of previous degree resides. Obviously this wave 2 could go even higher. It should take the form of an a-b-c but if a wave b it could also resemble a triangle.

Then a second bear leg down should start, a wave C or 3. If equal to the first (in the case where it is a C) that would take us to about roughly 22000. However if it is a wave 3 – the more likely scenario at this juncture -  a 1.62X ratio is sort of a minimum, 5120 points – it would target close to 20000. more or less where the supposed Trump rally started. After that there would still be 4 and 5 to go for a first wave!

The reason why I am inclined to think that this might be THE top is that all the talk is about Bitcoin and weeds. Bitcoin I do not understand and in any event it has already lost 70% or so. Weeds you could buy in Amsterdam, my alma mater, already 50 years ago if you cared to do so – I didn’t by the way-  so I am not sure what the fuss is all about except that the administration in the US may want to keep their beautiful prisons filled. They already have the highest rate of incarceration, two or three times the norm for a civilized democracy – in the world, 70+% of which is drug related, talk about MAGA.

Time will tell.

So our call was wrong by a dollar or two but certainly at this level this looks like a solid buy. It is down by 62% measured from the lows of March 2009. It has a nice wedge 5th wave which is a termination pattern. The RSI and MACD look fine here and you are looking at a target of roughly $19 which is 25%. Good luck.

We are short about 150/200 points from our ideal target but this looks like it might be done. More often than not wave 3 is the longest so 5 should be shorter. There is a wedge-like structure as a 5th of 5. In short we would be looking for a good bounce about here. This is a total drop of 3200 points.

So far so good. We are down about 2700 Dow points and are now “officially” in a correction. But everybody knows for sure that you should not sell here as you should look at the long-term etc. etc. The have no idea what they are talking about. I guess it is only the “pro’s “ that know that your first loss is your best loss.

Where from here? This may be a completed, or nearly completed first wave down. If so a bounce of 50 to 60% to the 4th wave of previous degree would be perfectly normal. If it is not a first wave but, say, a wave A, we should also get a bounce. Whatever it is after the bounce we should get another wave down at the very least, a wave B or 3. Time will tell.

If we continue down tomorrow at the same speed as in the last 1/2 hour of trading, we may be in a third wave and things will get unglued a little faster.

The applicable count would be a 1-2, 1-2, and now we are close to entering wave 3 of 3. Targets for this scenario are around 20000, that is all of Trump’s gains!