I get these reports daily now and soon you will too. I thought this one was important:
With Munchin formally 'activating' the Plunge Protection Team, thought I'd send an update.
The DOW is nearing its next major support level which should mark the end of Wave 3 of III down, and we should see a meaningful bounce from there. That key support level is 21,486. Measured as a whole, the DJIA reaches "oversold" status at around 21,515 (that is where the current price moves below the estimated 365-day P/E Ratio average for all 30 stocks).
If we have the Wave Count correct, the Market should bounce at or before 21,486, and recover 30-51% of the decline from December 3rd rally peak at 25,980, if not 30-51% of the all-time high on Oct 3rd at 26,951. It just depends on the degree of trend. Either way, we'd expect the market to find a near-term floor soon and start a Wave 4 rally. We are still in the overall declining trend channel of Lower Highs and Lower Lows, so breaking through the top end of that channel (right now at around 22,974) will be needed to confirm Wave 4 up is actually underway.
Note that AFTER that rally, we'd expect to see Wave 5 down, as the overall cyclical Bear Market continues. The bottom of that trend channel is below 21,500 and above 15,500...I realize that is a huge range, but the decline has been steep enough and choppy enough that I can't make a more definite prediction just yet.
If the market does continue lower with strength below 21,486, the next support shelf isn't until ~20,834. Just need to keep our eye on that 21,486 level and the pace/volume of trading and A/D ratio if it pokes at that level. Probability is we see a countertrend rally start soon, but if declines continue here past 21,486 with strength, it points to a larger Bear degree of trend and declines to next support levels below.
Note: Oil is down significantly today as well, trading below $44. Oil-dependent economies will be strained.
It is the last line that worries me. I will focus only on 8 critical things next year to assist you in understanding now just what is happening today but more importantly how this fits into my theory of what comes next.
The time is now. Get ahead of everyone else so you can help those behind.