[Update 2:30PM: The market hasn't given anyone an obvious good short entry. I suspected that might be the case. And there is still a complacency in the media. DOW off 400+ points from a recent peak and its business as usual with little concern. Back in September and October, the "worry" would have been right out front, and thus stocks continued to go up. No longer it seems.
Why the bullishness still? Heck 79% of the S&P have beaten expectations so far which is on its way to a record. The lagging economic indicators seem to be pointing up but social mood has shifted down. To the layman, nothing makes sense at the moment, and most market observers are no doubt calling this the overdue "healthy correction".
Notice how the media provides all the "answers" on why the market moves? They are making it up as they go along. They are telling the story of whats in their heads at the moment. But people listen and swallow the narrative the entire time no matter which direction we go in.
This SPX chart shows the RSI oversold on the hourly. Usually this occurs somewhere in wave 3 and then a divergence develops at the bottom of wave 5 and a turn is coming. An oversold bounce = wave 2 of higher degree.
[Update 2PM: I think a lot of people might be looking for a bounce or even some form of wave 2. I am not sure. I count 7 waves down on the DJIA. That either means this thing is not done or it was all just corrective. I am not buying the "corrective" part so logically I must count it as an aggressive series of 1's and 2's.
In a sense, I think everyone is looking around expecting someone else to buy the dips. And yet....
And for you conspiracy buffs, Team Bernanke and Geitner day's are apparently numbered so maybe they ain't such team players anymore? hrmm?
The RUT has had nothing but overlapping waves and doggedly holds onto its October peak. I sense that sentiment is still way too bullish still and the markets will head down some more until we see some bulls screaming for a change.
You can see the hard break under support finally after 4 tests.