Back in February, I did an extensive Q&A with Paul Desmond of Lowry's Reports (Part I is here, and the important Part II is here).
At the time, I asked Paul where we were in the market cycle, and he replied: "We are well in the process of forming a top, but we are not to the final stage of this thing yet."
That was dead on. After all the technical damage we've seen of late, I followed up with Paul to see what he was thinking these days; I wrote him:
We are running about 10 to 1 on the NYSE up down volume – but not as bad on the A/D, and not as bad on the Nasdaq. I’d love a bounce to short into . . .
His reply:
"It is very likely that our short term indicators will all fall to oversold levels as of today's close. That would set the market up for some kind of a snap-back rally (to short into) within the next few days.
Also, today's (Wednesday) decline has been flirting with a 90% Downside Day. If it ends as a 90% Down Day, the probabilities would strongly favor one do-nothing day (as investors try to recover from the shock) and then a rally lasting from 2 to 7 days before the decline resumes.
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