Thursday, April 17, 2014

Bullish Set Up





















The market made another high on this particular wave from the 1814 low and now we have an even better looking neckline for a potential Inverse Head and Shoulders. Please note that I tend to anticipate HS and ISH formations to trade the expected moves, so this IHS has not yet formed until we get couple of more waves. In fact, we might not even get an IHS. But for all intent and purposes, the market has a bullish set up and that is the pattern I am expecting. Last week when the market was in sell off mode I wrote:

Thursday - April 10th

"The ideal target for the C wave is 1812 (which implies a correction and a resumption of the bullish trend)"

- The market bottomed at 1814 in the cash market

Friday - April 11th

"However, a counter rally that reaches 1872 will be setting up the market for the resumption of the bullish trend and consequently new all time highs."

- So per my statement, today's rally topping at 1869 qualifies as a sign that the market is going to take out the all time high.

I am now just looking for the correction/W2 to unload the VXX position and go long. Had Google and IBM missed earnings last week the market would have probably reached sub-1800. But despite these announcements, the NASDAQ was actually rallying more than all other major indexes. So it looks like we're headed for 1900+. The short term trend and intermediate trend are still yellow but they will likely turn green early next week. The bear camp will need a bearish miracle or something from Russia to get back the lost momentum. If you are short, you want 1837 to break to balance out the bullish run from the last couple of days.

Short Term Trend = Neutral
Medium Term Trend = Bullish Trend being challenged
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Wednesday, April 16, 2014

Another 50 DMA Test





















The market continued to rally past the 50 DMA today and its peak is high enough to form the neckline for another Inverse Head and Shoulders that targets 1920. Also, going by my wave calculations, if this leg from yesterday's low is a W1 then 5 waves will end in the 1930 range. So the things have turned around somewhat for the bullish case but the critical part comes in the coming correction, which should start in the next session or two. If we get a successful test of the Trend Average and the 50 DMA, it is very likely that the bull run will continue. Bears must break and close under 1837 to keep their case alive.

I am underwater on my VXX but I will be selling hopefully at break even or a profit if the bears do their job. There are good excuses to sell tomorrow (Google and IBM miss), so if bears fail to gain momentum with these news then it will be time to go long.

Short Term Trend = Bearish Trend being challenged
Medium Term Trend = Bullish Trend being challenged
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Tuesday, April 15, 2014

Potential Intermediate Trend Change





















The market tested the 50 Day Moving Average early as I had speculated yesterday and the market sold off to test yesterday's lows only to reverse and test the 50 DMA again. I had expected the original test and the sell off but the hard bounce was somewhat of a surprise. The market seems to be putting in an ascending expanding triangle which in itself is rare and one that I don't recall seeing before. Usually, these sort of triangles serve as corrections so it might be setting up the market for another ABC move to new lows. The Intermediate Trend will most likely go negative in the next session or two unless there is some sort of explosive bullish rally so we might see violent moves in the next couple of days. I lean bearish as long as price action above the 50 DMA is not sustained and until that changes I am looking for lower lows.

I bought VXX around the test of the 50 DMA early morning and had a good profit couple of hours later. I normally would have closed the position as I tend to be conservative with locking in profits but I let it run and at EOD the position became negative. I am however holding it and hopefully I'll sell it on another wild market swing.

Short Term Trend = Bearish
Medium Term Trend = Bullish Trend being challenged
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Monday, April 14, 2014

Possible 50 Day MA Challenge





















The market put in a bottom in pre-market that was not seen in regular trading hours and that low tested the 1812 equivalent before rallying in 5 micro waves to 1834 before reversing to test the recent cash market low of 1814 and bouncing right back from there. The SP500 looks like it is either putting an ABC correction before resuming a strong bearish wave or is starting a bullish impulse with the strongest wave coming in tomorrow or Wed at the latest. The problem however is that the low in the NASDAQ (which has been leading the sell off) was breached today so that count can only be an expanded flat (ABC move) and the SP won't be rallying without the NASDAQ. So despite the fact the market has bullish signals that points to a test of the 50 Day Moving Average at 1845 to an Inverse Head and Shoulder's target of 1855, I wouldn't bet on it just yet. In order for bulls to retake ground lost and turn things around the market will need to make it to 1870 before correcting.

I had pretty good day today with my weekend holdings, which I sold at the high, bought at the low and then resold towards the end of the day. I did however buy a VXX position around 1825 but closed to position trade, so I won't count it as a loss (minimal loss anyway) until I give up on the position so I ended the day at (+30/-6). So far I've milked this thing for the past couple of weeks, call it luck or just simply good market timing :)


Short Term Trend = Bearish
Medium Term Trend = Bullish Trend being challenged
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Friday, April 11, 2014

C or W3?





















The sell off continued today and bottom came close to the 1812 level I mentioned yesterday as the ideal target for the C wave so we should get a better idea next week if this sell off has been a correction or part of a bigger correction. If we get a bounce to the 1837-43 area and reverse, then  it is likely that the bottom will be in the sub-1800 level. However, a counter rally that reaches 1872 will be setting up the market for the resumption of the bullish trend and consequently new all time highs. Either way, there's a good change for a counter rally (or reversal day) on Monday as the market has sold off a bit too fast on no news.

I bought a position in the pharma stock I was trading few weeks ago and XIV at the bottom today. I am not going to get greedy so I am just looking for 1837 to sell them both at a profit (unless we get something outrageously bullish). The risk for taking a long position at this point is if we get a bearish W3 with no sub-divisions then I'll have to sell at a loss on Monday. I was already ahead on XIV by EOD but I decided to roll the dice.. add some excitement to the weekend..lol.

Have a great weekend.

Short Term Trend = Bearish
Medium Term Trend = Bullish
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Thursday, April 10, 2014

Market Sell Off





The market got pummeled today, specially the NASDAQ which ended up down 3%. I was looking closely at the 50 Day Moving Average for the SP500 but that was lost as well so the picture is clearly bearish at this point. I was originally looking for yesterday's wave to reach the 1874-84 area but it felt short in the cash market. I had originally labeled that wave a B or a W2  so the current wave should tell us if we have seen the top for the next few months or if the market will stage a late surprise and reclaim its bullish momentum. The ideal target for the C wave is 1812 (which implies a correction and a resumption of the bullish trend) but it can be 1.618 of A so 1775. If this is a W3 then a 5 wave count should reach 1740-50 on the "conservative" side. As it stands, I see a Head and Shoulders targeting 1780 and 200 Day Moving Average at 1760 which should be a magnet for both short sellers and bullish buyers. These targets are all likely as long as the market is prevented from recapturing the 50 Day Moving Average. The only thing that I see as bullish is the permadoomster Marc Faber babbling today about how 2014 will be worst than 1987.. this from the man who was "100% sure" of a global recession in 2013 and pretty much every single year before that.. Now, if Robert Prechter from EWI gets any media time, then you know we have bottomed.. lol.

The market was not so kind to me as to allow me to buy VXX by reaching my original target but it's ok. I did manage to make some money for my coffee fund buying XIV at the 50 DMA and selling it on the small bounce (+27/-6). I am on the sidelines except for my ST and LT China positions, which actually have been doing well. But I will attempt to catch a bounce at the levels I mentioned by buying XIV again.

Short Term Trend = Bearish
Medium Term Trend = Bullish
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

Wednesday, April 9, 2014

Market Update





















The market continued to rally as I had been expecting and managed to close over the Trend Average and what remains to be seen now is whether it will reverse to put in a lower low or go for another all time high. Given the timing, I lean towards more upside but I am not betting on it until the TA turns bullish again. I ended up selling my XIV (+26/-6) for a profit as planned and now I am on the sidelines to see how the market behaves at the 1874-84 level.

The short term trend will turn bullish again if the market closes above the TA again tomorrow.

Short Term Trend = Bearish Trend being challenged
Medium Term Trend = Bullish
Long Term Trend = Bullish

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.