Monday, October 22, 2012

Lower lows ahead?

The market had another wave in it and a lower low was made with the final 5th that we saw today. This lower low is significant in that it turns the weekly trend down and unless the market can rally back up and make a higher high, chances are the market will head towards the 200 day ma. Something which I thought was not going to happen when the now "X" wave appeared. So I will be adjusting my trading (the US based trades that is) to reflect this change. The market will probably go for the trend average and possibly to 1443 before resuming another bearish leg. With that said, the emerging markets I am in right now did not even notice the US sell off on Friday as they just kept going up. And that to me indicates the risk on trade is alive and well, so I don't foresee any steep sell off as long as the 200 day ma is maintained. And to make something clear, I moved over to emerging markets because the potential for upside seems to be greater there. It doesn't necessarily mean that I think the US markets will tank, I believe as long as the intermediate and long term trend continues to climb that this market is going going for 1500+ regardless of what fundamentals are in place. This is a Q3 rally, nothing more than that so using earnings to gauge this rally stopped working in the summer.

Long Term Portfolio: 100% Long (Emerging Markets Only)
Short Term Trading Strategy: Bought XIV @17.64 as of 10/19. Selling and hedging longs depending on how the market trades around the Trend Average test which is coming soo

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