"Crashes happen when the shorts are out of position and the
bulls are fully committed to the long side"
Posted on Tuesday, July 09, 2002 - 10:14 pm:
(Posted by Challo)
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from Hahn -
Summary: Tuesday turned
out to be a continuation of the decline
which began on Monday. The afternoon
decline was deeper and steeper than
most expected. The weakness in the US
dollar, the fear of additional corporate
scandals or earnings disappointments
and a renewed terrorist threat caused the
major market indices to erase all of last
Friday's big gains. This had to be a
disappointment for the bulls. A test of
last week's lows seems imminent. A
breakdown to new lows is possible. The
breakdown or bounce, whichever
occurs, will determine our
interpretation of the cluster of lows
arriving in the last week of July. (A
breakdown below last week's lows
suggests a lower low by the end of
July.)
Minor time wave projections arrive on Wednesday, July 10. They do come from three
separate waves, so it will have a bit more power. At the very least, expect volatile swings,
with most of the violence on Wednesday afternoon. The overall market trend remains
“down” until proven otherwise. A lower low cannot be ruled out.
There is a good chance the 'crash' is still in our immediate future. It is possible our June 25
“time” brought a market breakdown and the beginning of a new leg lower. That is the bearish
interpretation. The bullish interpretation is not valid until we violate some of the overhead
downtrending resistance lines. Crashes happen when the shorts are out of position and the
bulls are fully committed to the long side. (That particular setup may have occurred last
Friday. Anyone using trailing stops on short positions was blown out by last Friday's spike
rally. Much enthusiasm by retail investors for buying a dip was evident during the holiday
shortened trading session.)