Thursday, May 23, 2013

Potential Trend Change

The market put in a bearish 5 wave count with today's low and the short term trend should go negative with another close under the Trend Average. The W4 bounce was the one at close yesterday and W5 materialized overnight to challenge the 1625-1635 area I had posted yesterday. And now that we have a very likely top, we need to figure out how this correction will unfold. I have been posting the 1580 area as a target because I see the Int W5 as part of a LT Int W3 of a LT W3. So going by that count, the market is now starting an LT Int W4 and if that level holds then I am expecting LT Int W5 to target 1790 by the end of this year or early next year. There are obviously other counts floating around but those who are familiar with this site know I count according to trends. That is why I avoid trying to count anything longer than LT waves as I think it doesn't really help someone who is trading. The "bearish" EW crowd will label the most recent 5 wave count as a bearish W1 (as opposed to my A) as they are seeking/wishing for a bear market. Personally, I welcome both markets as my primary purpose is to make money. But based on trends, this bullish rally is just catching break and it well should be after rallying like mad this year. I am sure once further downside materializes on this correction we will see the usual bearish fear mongers on the news again, the Roubinis, Pretchers, Fabers, etc. of the world and that will probably a good time for the correction to Just today I saw Doug Kass (who had virtually disappeared from the news) on CNBC arguing why Goldman's Sachs call for 1750 and 2000 eventually was wrong. Problem is Doug Kass has been shorting the market since Jan 1st thinking the market's fair value is 1425.. DK btw doesn't use stops so he has gotten steamrolled by this rally big time. How a professional trader like him trade like this is beyond me. And don't get me wrong, I respect him for putting money on the line as opposed others who just wants to sell newsletters but that is a crazy way to trade.

I position traded my VXX and improved it 22 cents so back to $18.31 as my cost avg.

Main S&P 500 Trends

Short Term Trend = Bullish trend being challenged
Medium Term Trend = Bullish
Long Term Trend = Bullish 

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