Although the System remains long and strong for all equities, the decision was made to take profits on a second equity index on Friday, exiting the Nasdaq for cash.  Current holdings: the Dow up 25%, Russell up 25%, Financials up 14%, Real Estate up 3%, Gold up 2% and on sell/short alert, Silver up 4% and on sell/short alert, and Energy up 22%, while  24%+ ROIs were taken on the SPX and Nasdaq.  From experience, once returns reach the middle to upper 20% range, a correction typically follows.  However, the System purists are still riding this wave for all its worth.

As you can see from the daily chart below four of the leading equity indexes, the Nasdaq, SPX, DOW and Financials have all closed above their respective BBs, so a modest correction at the least should be in sight.  At this point, there is a case to be made for both a bullish and a bearish count.  The potential for the bearish alternative has led me to take some chips off the table, for even if it doesn’t play out, there should be a nice re-entry point following a smaller correction.  I now have two bearish count options.  The Nasdaq chart below shows the first.  According to this count, primary wave [3] has topped right at the channel line that has contained the bull market off the March 2009 low.  The SPX chart shows a slight variation on the bearish count, that minor wave 3 of intermediate wave (5) has topped and after a small correction, there will be a final push up to complete primary wave [3].  The bullish count is shown on the DOW chart below.  According to this count only minor wave 1 of intermediate wave (5) is completing and this primary wave [3] still has plenty of upside lying ahead.