Market Risk

April 23, 2010 Friday we eased up to DJIA 11,200+ in a five wave count. That took us to a 0.618 retracement of the drop from the market high in 2007 to the March 2009 low as I predicted on November 23, 2009. In Elliott Wave Theory, a Wave 2 can retrace up to 100% of the Wave 1 fall from the high, but it would be highly unusual for it to do so. The risk of staying in the market just increased exponentially, even though all stocks have not been under distribution yet.

Action in Avon

Today AVP was down 8% and traded 0ver 21 million shares (about 5 to 6 times normal volume) on some trumped up news about China. This is what is known as a shake out. Something important will probably happen soon--maybe a takeover. This is the second such shakeout that has occured in the last 6 months. The stock has dramatically moved from weak hands to strong hands.