Equities dove to place interim cyclic low in afternoon as SPX got close to 1037 interim goal

While the ChartsEdge map suggested movement up after the open, it just wasn't that way - hence, one of those (fortunately rare) days when it didn't prove useful. As typical when that happens, it became obvious quickly, that's when you set it aside and look elsewhere. For Andre Gratian's subscribers, that naturally meant reading his updates about his expectation the low would be toward the end of the afternoon. As the day went on, one of Andre's emails said:

From: "Andre Gratian" <ajg@cybertrails.com>
Date: October 28, 2009 2:56:19 PM EDT
Subject: Market Update
....

This is why you have to allow for the time component to achieve its objective as well. And since it can vary by a couple of hours, in a sharp decline this can be more than a couple of points.

....

Andre

Others may have been counting waves or using other methods. Myself, only sorry that family matters kept me from more participation (and didn't want to give away Andre's cycle thought). But using our "string" still worked, with 1057 failing over to 1052, later 1047 repeatedly, and finally tickling 1042. Pretty close now to Terry Laundry's 1037! That's one reason why we're not looking for lower than that right now, along with the idea that today's low would produce a bounce into later this week.

And yes, the SPX lost the 1050 level - which did produce a struggle but once it was lost, that was a factor in the sinking farther below it. But as dicey as it is to trade against the (new down-)trend, we should expect some reaction. The VIX popped beautifully but approached resistance. And the TRIN confirms the market is short-term oversold; its 10-day moving average closed well over 1.20, at 1.44. Have I turned bullish? Hardly! But now that the market proved it's in bearish mode, let it have a reaction pullback. No matter how you handled today's action, a bounce will be the next good opportunity to sell for another wave down. Or, for those preferring to stand pat on swing trades short from last week, you may be just as glad to hang tight with those down into the 3rd or 4th week of November (at which time, the markets may start to try a Thanksgiving-to-Santa rally). That's probably a good time frame for seeing the entire big first wave down playing out, basically a 4 to 6 week time frame in total.

UPDATE: a reader asked my target for a reaction rally. Looks to me like a retest of 1057 is a reasonable objective - kinda guessing right now that can be a small 4th wave, then down to 1037. Unless we open weak and tag 1037 first - actually 1057 would still be a reasonable goal from there. There can be counts that would take the SPX higher, to and past 1060 to about 1067, but TMAR about 1057 on 1/2 and trailing stops looking for more is likely a disciplined way to approach it. JMHO as they say. Later, after a reaction rally/consolidation, the SPX is likely to test 1020 and bring a retest of that Fib approx. 982 into focus.

8:20 pm UPDATE II: Uh Oh! Here's what Terry Laundry says at his daily update page - "Oct 28th Comment: Market appears to be headed directly to the lower green envelop at S&P 955.". Hmmmm! Another reason to think that a reaction may not exceed 1057!