So...the US stock indices finally took a tumble yesterday. I was short the S&P 500 index from 1370 and remain short with half my position and stop at break even. I feel that we need a bigger market correction to give us the opportunity for some better long set-ups but we will have to wait and see. You can see from the chart that the market turned (almost to the penny) at the completion of a large AB=CD pattern reaching back from early October 2011 ). That along with the bearish divergence between price and indicators (red lines) was a strong signal to me that the market was topping. Moving on I would like to see a retrace to the Fibonacci .618 level (1264) but given how strong this bull market has been, I am initially looking for a retrace to the Fibonacci .382 (1307) level of the most recent swing. If it reaches this level, I will re-appraise my projections in the light of the price action immediately preceding. You can see that the price action retraced to the .618 of the two previous swings and given that the markets have a tendency to repeat themselves over and over again, the .618 level is definitely not out of the question. My only current long trade (VOD:LSE) suffered slightly but my gains on the S&P more than made up for that.
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