"So what we should have in short order here is another 140 point haircut or we could skip the haircut all together and get to the violent crash second part."
Now that we have our 140 point haircut (134 points today to close at 10,040), There is a real strong chance that the Dow will give up enough to get to our projected low of 9686. However, we run smack dab into two problems -
- The psychological barrier of 10,000
- The previous low of 9686.
So we have several scenarios that are possible:
- The market gives it all up in one massive shot. Say down to 9620 by losing 350 points in one or perhaps two sessions. Given the way the market kept bumping into the 10,098 as though it were a ceiling (red line on the chart above) lends credence to this thought.
- The market takes it's time and gives it up slowly over the course of the next few weeks.
More importantly, once that barrier is breached, (say by early-September) I fully expect there to be a massive ramp job from 9620 bringing us way back up to around 10,200. (A 600 point gain and in line with the predictions I made earlier. I would think this could sow some massive confusion as the Dow darts back and forth between 10,000 several times.
There is also the possibility that July through mid august was the ramp job. If this was the case, then expect the market to give up and start plunging immediately.
Even more interesting is the dollar, which is flirting above its 50 DMA at the moment. Could it come back below that level and sell off? Perhaps around mid-September?
UPDATE: I'm guessing that a link to the Hindenburg Omen would be a good thing.
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