Up until today, it appeared a series of first and second waves down were forming from May 1st top and that a third wave sharply lower might unfold right away. Although this possibility still remains alive, some other wave count probably is developing, wherein prospectively the first wave down has completed already and the second wave presently is forming. Judging by today's NYSE Advance-Decline differential — the best of 2012(!) — it's likely a "c" wave of the second wave of five waves down began taking form today.
Still, a look at both the NYSE Bullish Percent Index and the S&P 500 Volatility Index reveals the market is deep into nasty's neighborhood, thereby confirming likelihood a third wave down could unfold over coming days. These measures jive with physical reality, too, wherein a European Monetary Union whose increasing risk of collapse finds even Cramer on guard. All ingredients combine to make for calamity whose dimension could prove far more eye popping than most observers suspect right now. Per widespread, negative sentiment as self-fulfilling prophesy rather than contrary indicator, there's the recent case of August-September 2008 tempering judgment. Sentiment was just awful then, too. The kicker now is there are more eyes on the exit, as far more debt is at risk of unraveling.
One thing on my radar is the [rising] line of support/resistance common across major indexes, separating early-June 2009 peak from bottoms established in 2010 and then again in 2011. In the case of the NYSE Composite Index above a more foreboding momentum picture (see bottom panel) ought develop once this line of support is reached over coming weeks. A new low close (unlike what occurred 2011, versus 2010) confirmed by MACD would be fitting circumstance prior to a further fall whose end prospectively could find major indexes challenging respective March '09 bottoms, or even take these out.
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