I posted last week about a potential rally coming and about the possible break out today and the market did just that. With this break out we can continue the 5 wave count on the intermediate chart I posted. And going by the wave length relationship, if this W5 equal W1 then we are looking at 1459 as a target. However, because W3 was not particularly long, W5 has the freedom to extend to 1500 (if 1.618 of W1). So after a few weeks of consolidation and "disbelief" by many, the market is here and higher highs are very likely. My guess is that eventually those people who missed the rally will either start jumping in right now or wait for the 50 day MA test which I can almost guarantee it will come after this wave is finished. The question is will the 50 day MA be 1400+ by then?
I covered my hedge per my TA rule and I'll re-take the position when this is over.. I should have followed my instinct yesterday! And to those folks that are short, use the trend average as your guide to GET OUT. People that keep shorting the bullish short term trend are going to get their accounts decimated.. I learned my lesson a long time ago and would hate to see people make the same mistakes I did.
Last but not least, I posted a few charts today.. the long term chart just highlights a possible scenario. I don't trade on it obviously but it's interesting to keep track on likely long term outcomes given the intermediate and long term trend.
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