Monday, July 1, 2013

5 Waves technically completed but..

I have the market technically showing 5 waves completed from the 1560 low and the targets I had for this wave which were the 50 DMA, 1623-26 and the gap have all been met. In addition, the 5th wave from the W4 low of 1601 to the W5 high of 1626 is 25 points, which nearly identical to W1 which came in at 26 points. Now the problem with this completed count was the pre-market action, specifically the move Sunday night when futures moved to lower low on what would have counted as a C wave to the equivalent of 1597, the move I was expecting on my Friday post. So if I take into consideration the completion of the C wave at 1597, the top today is just W1 of W5 and not W3 which is how the cash market reads.  And since there is no rule written for this, I am going to log this and future instances of these cash vs pre-market counts and see what is normally the outcome as placing a trade under these conditions is a toss up. I found it unusual that the 1625-30 gap was not closed completely so I suspect the market might try again one more time.

I did not place any trades as the count is not all that clear but I will be looking again at support and resistance levels for higher reward/lower risk trades. Also, the market has closed again over the TA and more upside (specially above the 50 DMA) will turn the short term trend bullish. Last but not least, I'll make a note to remember the Russell Reconstitution next year as it is a good spot to short right into the close as the market gets flooded with shares.

Main S&P 500 Trends*

Short Term Trend = Bearish Leaning Neutral
Medium Term Trend = Neutral Leaning Bearish
Long Term Trend = Bullish 

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

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