Market Correction

$COMPX 2150.73 -12.74 -0.59% 2,556,394
$INDU 9949.36 -92.14 -0.92% 1,398,943
$INX 1081.40 -9.66 -0.89%

SPX traded to 1101.36 HOD and retrieved closing near the low of the day. Even though Markets look as if "TOP formation" with inverted reversal formation with high volume selling at major pivotal resistances, it is better to be cautious as the theme of the 2009 rally is mainly based on "Short squeeze" without any meaningful correction.

• The W3 corrective wave theory is enticing and is due after long 6-7 month rally; however, based on the previous price pattern, the risk/reward for being in the market is 50/50 as the recent rally has been sharp. aka Bernanke greenshoot.
• Market breadth during the 2009 rally has been narrow compared to 2003 market rally. And market breadth and price action has shown negative divergences for months.
  
• Bearish fundamental factors didn't stop markets continuing to advance, so, blindly following the EW downside forecast can be deadly. Bears need to be cautious as the selling which we have seen could well be another trap.
• "W3" after A-B-C correction sounds reasonable after the incredible 6-7 months rally, nevertheless.
• USD broke 76 support, and now it is trading near at 75 support. The counter part Gold traded to 1072 +/- resistance and trading at 1058 at the moment.
• AAPL is upgraded to 300 which is a bad news for bears, however, if markets start to correct, it will likely fill the gap-up.
• VIX traded to 20, then, closed at 22.22. Would this really be a start of a meaningful correction?
• Markets are near CIT pivots, and if we are indeed in W3, this ride will be "Fast & Furious".