Thursday, January 23, 2014

Correction Completed?

The bearish wave I was looking for finally appeared today and it broke through the 1830-35 area I was looking at as support. However, since the wave is part of a double Zig Zag and a C wave, it still falls into a correction rather than the start of anything more meaningful. Also, this wave was about 1.6 of the A wave so technically there's nothing out of the ordinary. With that said, the Trend Average turned negative but I would only start entertaining bearish options if there is follow through selling that breaks the previous low of 1815 and specially if support at 1811-13 breaks. Fundamentally speaking, the reason for the bearish wave was the PMI in China which is usually weak this time of year so I think this was used more as an excuse to sell than anything else. If the Chinese stock market is of any indication, the SSEC fell less than half a percent after the PMI news (after rallying almost 2% the day before) and all loses were regained and some at the time of this post so obviously they don't care.

I ended up buying XIV near support today which just happened to coincide with the bottom and I sold at the end of 5 waves on the micro count. And If tomorrow there is a retrace of this initial bounce it will be a fairly easy long as all I need to do is put the stop a the low from today. I haven't had a losing trade (I'm 9/9) this year so far so I am hoping to keep it going until February :)

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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