The worst senario

Diver

Superman 08 is upset today about stock market plunge. He called in Goldman Sucks and other Wall Street CEO’s.

Superman 08 --“You guys cheated me. Your warning letter made me yielded that much and stock market still dropped after debt ceiling deal as it would without debt ceiling deal.”

Goldman Sucks and other Wall Street CEO’s --“No, we did not lie. But you were too hurrying to yield. Here is the second part of our warning letter, which we are going to present to you tonight. The first part of our warning letter told you that the stock market might drop 30% without debt ceiling deal. The second part of our warning letter will tell you that the stock market may drop 50% after debt ceiling deal.”

Superman 08 --“What? 50%! SPX 1332*50%=666. That will be double dip. Now I am too late to deny my agreement.”

Goldman Sucks and other Wall Street CEO’s --“You -250! The only way to prevent SPX from dropping to 666 again is to announce QE3 as soon as possible. Otherwise, you will see another -250 on DJIA tomorrow!”

Diver

Frankly speaking, I do not see any reasonable reason for the market plunge for the last three days.

I guess it is just selling on news and over-reacting causing panicking, because MM's want to shake off bulls, due to bull wagon was too crowded since last Friday when too many people expected debt ceiling deal.

There may be still more shaking and choppiness ahead to scare away bulls before resuming uptrend. Once it stands above the S-H-S neckline for three days, it will go to revisit the head and invalidate the S-H-S and then march on to new high.

Diver

What is next now?

Continue rebounce with the hope of QE3 till Fed meedting on Aug 9, next Tuesday. And then sell on news again, no matter Ben announce QE3 or not.