Markets' tumble easier to blame on Dubai to avoid these bearish prospects

Of course it's easier to blame Dubai than Finonacci for the market turmoil the past two days. The rally intraday was impressive for those able to fade the markets' opening levels. But the rally stalled at levels that could mark simply a wave 2 pullback if the drop was itself just a wave 1 of something much bigger to come (like the C wave we've been expecting). Was this the first step down after the rally crest? It's very tempting to say yes. But ... let's take a look at some bull vs. bear factors to consider:

1. Bullish that today during the US market open, volume wasn't too bad and price actually moved up most of the day.
2. Bullish that leading indices like the Dow (see DIA chart below) didn't fall too far and bounced from nearby moving averages.
3. Bearish that many other indices and sectors like the broader Russell 2000 are relative lower and weaker.
4. Bullish that the TRIN popped higher with its 10-day moving average over 1.20 (although its inventor Richard Arms, as quoted from an article mentioned here about a week ago, believes the stock markets overbought).
5. Bearish that the turmoil resulted in possible reversals from important Fibonacci levels in many assets - Dow 10,334; $USD 74.75; gold $1192; QQQQ $43.30; the RUT already reacted back from $595.
6. Bearish that volume was actually relatively strong on a US holiday-shortened session, with indicators threatening to roll down.

All investors and traders must remember that any trend reversal must be confirmed. And that one or even two days don't make a reversal (not unless you're working Fibonacci patterns and being agressive while ready to activate stop loss orders if the pattern is violated). As I've explained, it's permissible to have price exceed a Fibonacci target, even by a whole day - once. After that, if price has reversed back across that line - as it did yesterday and today (and previously had done in the RUT) - then I really don't want to see it close past the line again, certainly not by making a new high/low. So as a tradet who relies on Fibonacci levels as a key tool, I really want to see this week's extremes respected by subsequent action as part of confirming that the trends are changing.

We'll also want trend reversal patterns to print out which will take at least a week to assess. Meantime I'm sure we'll have a lot to analyze this weekend. Another note - this is a prime example why it's difficult to trade when all seems down but the intraday is a rally, then leaves you wondering which way next. So we'll do our best to analyze the probabilities. Enjoy your (holiday) Friday evening!