The market dropped today as the stochastics said they would. Trading volume was light with the bulls in an overbought condition.
The CPC and CPCE spiked up this morning, but went to a mild slope down after close. If the market declines at close tomorrow, I expect we would get a trend change confirmation with the market ready to start a new down leg. The VIX is already in an up position indicating a bearish trend change. Once all three of the indicators point up at close, then we will have an enter short position.
I speculate the next down leg should take the Dow to about 7,000 or below and the S&P to 745 or below.
The daily stochasics are at a top and ready to head down. Once it does, a new down leg will begin, but it's guidance for Wednesday is indecisive. Both the 30-min and 15-min stochastics indicate the market should drop during the morning hours of trading. If the daily stochastics turns down over its moving average as a result, which it might, then I would suspect tomorrow will end up being a down day.
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