Update - 23rd November 2011

So the initial target of 11500 on Dow has been achieved and we have a close below 11500 as well. Some short-covering is due now but in all likelihood this won't exceed 11625 levels; to the extent 11625 is not taken out on the upside, safe to assume that the next leg downwards will resume with next destination as 11250 from where the next round of short-covering will start.

SnP fans with some extra margin can go ahead and short SnP at current levels via Jan futures and buy a 1200 Jan Call to hedge the same 1:1; target for SnP is 1130 [it will take a long time hence suggesting Jan contract for the same - could take time upto March also]

Update - 21st November 2011

Happy to be able to get this forecast right; the close below 11800 on Dow and close below 1230 on SnP invited 11550 [a shade above the predicted 11500 levels] and SnP hit the targets.

Shorts should now revise stop loss to 11600 on Dow to lock in gains [and 1195 on SnP] How far down this will go is anybody's guess but some short-covering should come by EOD or perhaps tomorrow. Expect at least 38.2% - 50% of the current fall to be retraced from the lows before starting the next leg down.

As far as I am concerned, wanted to see this on Black Friday but markets decided to do this after slicing and dicing the turkey ;-) Important point to note is that the December series of Dow has opened on a bad note (today being first day of FnO series) and in all likelihood, a lot of people will rename November 2011 as Mowember unless the Fed comes in and introduces QE in some form [if QE comes, then bulls will mow down bears once again!]

Update - 14th November 2011

Still too early for bears; looking for a counter-trend bounce on Dow above 12k-12200 levels and 1270-1290 levels on SnP before the next leg down; a break-down of 1230 on SnP on closing basis will be the first sign of weakness and 1190 will be the deal sealer for bears. Likewise, a break-down of 11800 on closing basis on Dow will be the first signal and a breach of 11500 will be the deal sealer for bears.

Update - 12th November 2011

Not much change to the outlook and just 2 conditions apply

2 consecutive closes above 12200 and Dow will may try a poke towards 12400 levels
2 consecutive closes below 12k and Dow in all likelihood will go to 11500 levels from where a short-covering rally up can be expected [confirmation of 11500 will be a close below 11800]

A close below 1230 on SnP will be the first signal and total weakness only after it stages a close below 1190 levels

Dow and SnP range-bound whilst Nasdaq is continuing it's counter-trend move up; Transport, Banking etc have all confirmed bearish outlook whilst Utilities are holding firm still.

A key point one must not forget in the entire set of moves we had from the peak in May, to a trough in September/October and now the subsequent retracements

Despite accounting for the counter-trend rally, the entire market capitalization has been eroded for well over worth of QE1/QE2 put together! Little wonder the likes of Goldman Sachs are asking for some GAAP adjustments to be made for allowing balance sheet not to be shrinked basis 'MTM' and rather 'Fair Value'

This is yet another example of how people want to avoid the real problems and try all formats of financial engineering stunts - can any perma-bull answer the fundamental question as to why despite such a close index value on Dow / SnP from the May 2011 highs, so much shareholder value has been eroded and the 401k accounts are getting more and more toxic? Why despite lower than 4% record levels of mortgage rates, housing prices are not going up? Long live the bulls - long live shameless manupalitive bankers who cannot just think beyond complicating matters for common people for their fat bonuses and simply do not have the will to extend business credit which is what made the West a truly competent force!

Update - 7th November 2011

Critical levels remain unchanged - safe to open shorts here with appropriate hedges via options
First sign of weakness will be a close below 11800 on DJIA and a close below 1230 on SnP

Update - 2nd November 2011

Critical Support at 11500 levels and a poke at 11900-12k levels once more cannot be ruled out. First tranche of shorts should be opened as close to 12k as possible whilst safe traders can patiently wait for a close below 11500; once a close below 11500 is registered, it won't be too long for Dow to retest the yearly critical support levels of 10250-10500.

Patience is the key - refrain from hitting the trade button on each tick