Stocks are about to crash

This is a short update on today’s action in stock markets.

Today’s action in equities is the writing on the wall that stocks  topped last Friday and are headed down – big time.

I issued a sell alert in the Dow at 16,450 this afternoon, which was the day’s high.  It closed down 250 points on the day and has moved below Tuesday’s low at 16,200.  This sets up a very likely third wave situation – these I like because they are long and strong.

The high today was on a tramline kiss and the reaction down off it was a scalded cat bounce.

This was textbook action.

Here is the chart I took earlier this afternoon as it was kissing the tramline:

My first target is the third tramline (not drawn in yet) in the 16,000 area.  But much lower prices beckon.

Interestingly, one of the seekingalpha.com articles today was entitled: European Rally has Legs.  The German DAX was down a whopping 200 pips on the day.  Some legs!  And great timing!

I also took profits on my long gold trade today at my target at $1320.

My Weekly Wrap will appear on Sunday.