Friday, February 17, 2012

Megaphone Top

The market made it to the 1360's and it looks like it really wants to go for 1376 (1.618 of W1 or A). And although I am not surprised at the level we are in, the lack of normal corrections is what makes this leg unique. But as I have been saying, the odds favor a substantial correction so I am looking for this leg to start the correction in the next week or two. Also, there is a clear megaphone top or broadening top pattern in place. In fact, it's almost textbook so we'll see if the market topped today or wants to make that 1376 number and then go down. I executed my trade as planned and I bought the VIX at the open and sold it within 20 minutes, so that was the quickest 1% profit I've made in a while. And I remain short over the weekend. My thinking is if we go down Tuesday then it's good, if we gap up then I'll do the same exact thing I've been doing during all these morning rallies which have been working out pretty good considering the amount of successful trades vs negative ones as shown on the portfolio:


Also, somebody asked me to post my trades real time on twitter and I get lazy with that. However, I'll post the intraday trades as they happen on Twitter so everything is time stamped. The reason I write for this blog every day is to force myself to be on top of the market more than anything else, to tweet my trades on the other hand doesn't really have a return on my "investment" so I'm much less motivated there. If anything, it just shows that technical analysis and wave counting does indeed work. If technical analysis had no value, my trades would probably 50% successful and 50% negative (the odds of flipping a coin). But as of today, my "batting average" if you will, is about 92% which is not that bad considering I've been mostly shorting a persistent rally and wrong on anticipating the top since I started trading this year.

Last but not least, compare the chart I posted to the textbook megaphone pattern below. Sooner rather than later, the market will sell off.

Have a great weekend!

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