Friday, October 12, 2012

5 Waves Completed

The market followed the 5 wave count posted and with the low today we now have a perfect 5 wave count, so I hope the market doesn't mess it up on Monday by extending the 5th. If you look at the chart, you can see W1 was 18 points, W3 was almost a perfect 1.628 of W1 and W5 is exactly the same as W1 (18 points). So as far as wave proportions, this is about as textbook as it gets. Also, with the low today the C wave is 45 points, which is exactly the same as the A wave. Furthermore, with today's action the market finally tested the 50 day MA which I first talked before the market peaked but which I had given up on when the market went up on the B wave. So now we see if my prediction from last month proves correct or if we are going for the 200 day MA instead:

September 6th

"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?"

Gold looks like it is finally starting to form a handle for its cup and handle pattern and the emerging markets I bought recently are on a bullish wave 3 despite the sell off in the US. So when putting everything together, odds favor the bulls and this sell off is a correction. I technically have no skin the game (As in the US market as I moved all my longs to Emerging Markets) but I couldn't resist the perfect 5 wave count today so I bought some XIV (the inverse of VXX) on margin for some coffee money :) How the market bounces or rallies towards the trend average could give us a better picture of what's in store for the remainder of the year.

Have a Great Weekend!

Long Term Portfolio: 100% Long (Emerging Markets Only)
Short Term Trading Strategy: Bought XIV @17.33 as of 10/12. Selling and hedging longs depending on how the market trades around the Trend Average test which is coming soon.

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