Rule No. 1 - Protect your capital

The very first thing you must learn in Judo is 'break floor', the technique of protecting your body from injury. In stock investment, my No. 1 rule is to protect my capital - pay attention to whatever possible danger sign.

There is one danger sign today - Hang Seng dropped 435 points (2%) and has gone below its lower trend line, a bad sign. If it does not cross back to above the trend line within the next two days, it is possible that its major wave (IV) correction has started.

Hang Seng will never go into a major correction unless Dow has started its major correction. To prevent such an event from occurring, Dow must not go below its short-term support and instead it must surpass its previous height of 9829 and break its upper trend line.
If Dow can break its upper trend line, the wave count is no longer 1-2-3-4-5 as shown above, the count is more likely to be 1-2-i-ii-iii as mentioned in my previous article.