Thursday, March 29, 2012

Close under the Trend Average

The market had a W4 in it and today we saw the end of the W5 at 1391, which got somewhat close to the 1387 level I mentioned yesterday and I am labeling this the A or W1 wave. We already have a bounce to the Fib retracement area which technically is enough for the B or the W2 but if we go by textbook wave theory, we should see a zig zag to the B or W2, so might see more upside that will meet resistance at 1407 and 1414. If these levels hold the market, then look out below as it will form a Head and Shoulders pattern and put in a nice looking B or W2 there. If the market can break through then we should see a higher high. But as of now, we have a close under the Trend Average after an bearish impulsive wave. So optimists better come buying tomorrow or else the rally has a good chance for a substantial correction.. and remember this is all happening during an end of the quarter window dressing period.

Today I hedged my VIX with XIV and sold it at the end of the session just in case the B or W2 is already in. Trades logged as follows:


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