Look out down below!

I have been watching the relief rally in stocks this week and in the last hour or so, markets have been falling sharply.  Apparently, they did not like the retail sales figures over Christmas.  I believe I forecast as much last year, so that was no real surprise.

Here is the risk-on Nasdaq:

Remember the chart from last time when I showed the five waves up to the end-of-year top?  The relief rally has been of complex form – not a clear A-B-C, but it did carry to the edge of the gap created on the first trading day of the year.  But Boy, did it not like that gap!  It ran like a scalded cat and now I believe we are in a significant third wave down.  It should take it to the 3440 lows at least before ending.

The other indexes are showing similar patterns on their charts.  I particularly like the German DAX from the short side.

We are entering a very interesting phase