Monday, January 13, 2014

Short term trend has turned bearish

The market's failure to break the 1843 resistance level left from last week resulted in the most "significant" sell off in 2 months today. Obviously, the IHS has been invalidated and so far it looks like there is a bearish stand alone W3 so we could see a slight bounce and then a lower low. The reasons for the sell off vary depending on which media outlet you watch but it seems like the excuse  is mainly earnings anxiety and fear of taper. So if we get a bounce that gets stopped at the Trend Average, I assume there will be a bigger bearish wave that will take the market under 1800. After all, a LT Int W4 was supposed to start at 1790 and perhaps this is the multi-month wave that will reset all the longer term oscillators and test the 200 Day Moving Average? It's still too early to tell so I am labeling the move from the high as an ABC but should the "C" wave gain traction then it will increase the probabilities of a 5 wave count.  The near term level to watch is 1811-13, if that breaks there is a stronger support cluster at the 1775-80 level so I will be watching how the markets bounces before getting into a new position.  

I sold the VXX position at the A=C level of 1818 and will be buying it back on a test of the TA. But if the market continues to sell off then I'll catch it from the long side, ideally at the 1775-80 support level. With today's sell off, I finally made enough to pay for my fence!! all done with VXX. But now I am moving on to painting the edges of my roof, so we'll see how long that will take :)

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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