Stock Market Correction May Start Soon

In spite of today's intraday reversal of some decent losses, the weight of the technical evidence continues to point towards a short to intermediate term correction which will set up a final 5th wave move to a more significant high above the 2011 highs. Buyers have continually bought even the smallest dip. This is not bullish. The market is probably exhausting short to intermediate term buying power at the top of the wave which will likely result in a deeper and longer correction.

The market has been maintaining its highs on the strength of earnings releases and the grand news that Greece will not entirely default on its debt in the near term. That's all priced into the market now. The occasional "better than expected but not really great" economic release has also created buying excuses for anxious bulls.

If indeed a correction is due or in progress, the wave to be corrected is a wave (iii) of C off the December 19 bottom:

A 38.2% correction will take the market to the vicinity of the 50 EMA and the uptrend from the August and October 2011 lows. That will correct intermediate term overbought conditions and create a nice buying opportunity for a good rally above resistance to new highs.

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