http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=6&dy=0&id=p18894193176&a=214966864

We remarked, when the new high stop was tripped, some days ago, that scaling in to a hedge was not a bad idea.  That was a good idea.  The downwave, continuing, has now taken out the first target of the rule of seven.  More hedging might be in order.  And — if you told yourself that you would exit or hedge when the new high stop was hit you better have done that, or your immortal soul is in danger.  It is the devil who tempts us to change our stops or procedures when the market is going to hell.

Is this going to continue?  No one but the devil knows (and the Congress), but there is an old rule of thumb (as opposed to rule of seven), and that rule is:  the dominant trend tends to continue.

As we have noted previously we are completely hedged — and we are going short the euro.