They can still get back in the channel, but the damage is being done. This market is now vulnerable, and last week I told you as we got to the end of the week, risk was going to be very high. I even went so far as to go out on a limb and pour cold water on that incredible run in the SOX. One of my major revelations of the past year has been power of wide range bars, and the territorial aspect of technical analysis. Normally, that run in the SOX (and elsewhere) would be an area of the market one could bank on that it would not be retraced. But when major cycles expire, they end hard. The only thing that will trump such a strong pattern is the end of an important cycle. As you know, a bull market doesn’t hit 261 weeks often. So one needs to know when to expect the rule and when to expect the exception to the rule.
We have enough to chew on. Let’s see how this plays out. Keep one thing in mind. I’ve shown you prior crises of history and how the stock market reacted. Most recently, I showed you this during the Arab Spring in 2011. That sequence started in February with the problems in Egypt and Libya. That sequence did not end until the Japanese earthquake/tsunami/nuclear disaster. If memory serves me correctly, that low also came right near the Gann Master Time Window in March 2011.