Dow - High Volatility

US market dropped sharply at the opening of Tuesday trading, Dow dropped 160 points (1.5%) after one hour of trading. US market has been rather volatile lately because of European debts problem.

Judging from the pattern of technical indicators, the current pullback has to be of a higher degree. Based on the indicators reading, a wave 2 correction is confirmed at this stage but whether it will slowly develop into a major (VI) or even higher degree Mega wave II correction is of anybody guess.

I prefer to assume that the correction is wave 2 at this moment, somewhere at the sub-wave C of wave 2. As long as S&P can hold above the lower green trend line as shown below, wave 2 remains intact unless at the close of today's trading S&P sinks below the support line. Under such a plunge in indices, the probability that the major wave (V) has been completed becomes very high

I will be in Shanghai starting tomorrow until Sunday, so I won't be writing in the next few days until Sunday night.

Dow has given up 240 points (2.16%) at this moment and S&P is at 1174, dropped 28 points (2.33%), resting on the lower trend line. If at the close, all indices are well below the lower trend line, I will have to reduce my stock holding.