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Correction? or More?

October 28, 2009
tags: ,

So it looks like I had pretty good timing in my last post.  The market has fallen off that 2009 high and the VIX has jumped in just a few short days to the top of that recent range.

It’s noteworthy that we closed below the 50 day MA today.  There is a diagonal trend support line from the lows of the last couple months, which may just hold.  However, with the long, rising wedge formation having been broken to the downside, it would seem only natural to see a move down now, perhaps to the 95 area, the most obvious area of potentially strong support.  Also, look how far above the 200 MA the 50 MA is currently.  Even if the 200 MA is rising, we’re pretty high above it.

After a 50% gain from the March lows, to see a 10-15% correction at this point would be pretty reasonable, regardless of whether we’re in a new bull market or still the big bear market.  Only time will tell, but this does seem a pretty obvious first shot across the bow.

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