Wednesday, December 4, 2013

Another Head and Shoulders in the works?

The market was very volatile today but we got that 5th wave I was talking about and I now see a complete 5 wave count. The bounce from the low could possibly form a right shoulder for a bigger Head and Shoulders that targets 1743, so I will be watching 1802 very closely as that area will be the key for the next big move. At the same time, there is the potential for an IHS but it's too early to tell. I am assuming this completed 5 wave is either an A or an W1 with more downside to come. The Trend Average is still rising despite today's lower low but if we get another close under the TA tomorrow the trend will likely turn bearish. The last option, which I don't think looks likely (but one never knows for sure) is that these 5 waves are part of another W4 correction, similar to several W4's we've seen this year. If that is the case then we should see the IHS form and have enough notice to position ourselves accordingly.

I couldn't resist today and sold all the VXX at my target and bought longs for the bounce. If we get to that 1802 level, I will be locking in profits and buying back the VXX. But in the meantime, I have set my stops on the longs to break even as I am comfortable ahead. Who said the markets couldn't be possibly timed :)

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