At the closing bell of Wednesday session, Dow dropped 105 points (0.7%) to 14,897, moving further away, southwards, from its lower support line. A 0.7% drop may look ordinary, but the cumulative drop of 761 points (4.8%) from its peak of 15,658 is too big to be considered as a sub-wave anymore, it has to be part of a higher degree corrective wave, the major wave (6) at best.
This is assuming the drop can stop at the long-term support line as shown below at around 14,000 level for a 10% correction.
The next possibility is the completion of mega wave 1 that has only 5 major waves.
Under this scenario, Dow will punch through its long-term support line and will proceed to either the bottom of major wave (4) at 10655 level for a 30% correction or all the way to the starting point of mega wave 1 at 6,547 level for a 100% retracement :( The bubble has definitely burst. :(
So, personally my own strategy is to get out and move to the sideline and wait for Dow to tell me whether it is forming its major wave (6), a 10% correction, or it is going to punch through its long-term support and go for a free fall.
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