I did another computer build over the weekend, so I got a little obsessed with that. Last week the market completed a sequential 6 weeks on the downside and I was short every step. My daily technical composite registered a buy signal by advancing first to +16, then +20 on Friday. This is a series of overbought/oversold signals that has forecasting value as a group, while each indicator has limited forecasting value individually. This is the first leg down of a bear market resumption and the profile of the decline is that first waves do not crash. The structure of the decline is full of overlaps in all indexes, so 3 down is all I can get out of the wave pattern. The only index that can be counted with reasonably clear waves is NDX with 3 down complete. If it is a 5 down in progress then 2265 is a likely retracement point.
Bear markets can certainly lead with a 3 wave first and I believe that is what we have. Nasdaq 100 has reached it's 200-day M/A and DJI has reached it's 150-day M/A. I've made good money on this decline so far. By reducing my exposure I'm allowing the market to set me up for re-entry higher. My trading philosophy is to hit singles consistently and only rarely swing for the fences.
First stop, 30-minute M/A, then NDX 2265.