Understanding the development and structure of price in multiple timeframes, suggests the current rally off of last Friday’s low is countertrend and the main trend will exert itself for one more leg lower at a minimum. The just posted Newsletter analyzes the probabilities of the recent selloff being countertrend to the rally off the 2009 lows. The question facing traders and investors is whether that countertrend move is complete or not.
In the next few trading days we should get a good indication of whether it is complete or we will see another thrust lower. Market internals suggest, at this point, there will likely be another leg down. Unless the internals change, have protective stops on all long positions. It will always be easier to re-enter at lower prices.