Friday, December 13, 2013

Triple Bottom Reversal or Triangle?

The market did not rally today as I was expecting and instead tested the low from yesterday twice before closing the day in a neutral position. However, the test of the lows were higher than yesterday's by a thin margin which means the count to the Trend Average is still valid and in play. Looking at the pattern, there is a potential for a Triple Bottom Reversal which calls for a bullish Monday. At the same time one could make the case for a triangle that implies another leg down to test the 50 DMA. I lean towards a counter rally since I see enough waves to call the entire structure completed and that is how I am trading it. So I am holding on to my XIV and my other short term positions. The whole taper thing is just an excuse so it will be thrown around next week as the reason for market moves, not that it is the real reason imo since taper in itself is a sign the economy has gained enough traction to be taken off support. But markets need excuses and this is the only one they can think of for now to scare off people and get the bears excited only to trap them again. When you see the likes of Doug Kass, Prechter, Marc Faber or one of those always bearish "experts" on the media telling people why the world sucks then we'll know the bottom has been reached.. works like clockwork.

Have a great weekend! 

Short Term Trend = Bearish
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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