Next week

The market didn't really do much today but it did manage to form a head and shoulders pattern that targets the low 1420's. So the count I've been posting is still valid and hopefully we'll see that bearish 5th wave early next week. Once we get a low for this bearish wave, we should be able to see if the market is indeed going for 1500's. The markets do look bullish and as I mentioned few weeks ago when gold broke out, if gold makes new highs so will the stock market. Also, there is an impending long term trend change to the bullish side on emerging markets. This means the "risk on" trade is in and I will not be all that surprised if what we are seeing now is just a correction (on the SP500) of an ongoing bull market that will challenge the all time high. Also, I've been loading on emerging market ETFs and I am turning the rest of my cash into equities early next week on my long term portfolio. There are some international markets that are likely to double or triple in the not too distant future and the deal I've made with myself is that if I am right on the emerging markets (specially China and Hong Kong), I will post pictures of my vacation to the Easter Island on this blog.. that will basically mean yours truly is for all intent and purposes retired :)

Have a good weekend!

Long Term Portfolio: 100% Long
Short Term Trading Strategy: Hedged with VXX @8.98 as of 09/13

50 Day Moving Average ?

I just realized the post I wrote for yesterday was never published. My starbucks wifi connection stalled so I am going to blame it on that.. anyhow, the market seems to have put in a W3 bottom yesterday and today we saw a W4 counter rally. And if this pattern turns out correct, we should see a W5 bearish wave and see a lower low. What I am watching for is the test of the 50 day ma, which doesn't seem likely with this wave structure. That would be a great level to close my hedge but I'll probably start locking on profit when if this bearish 5th wave appears.

Short Term Trend Change Imminent

The market finally revealed itself today and we can officially label the 1475 a "top" for the wave that started from 1329 back in late July, so my target for 5th wave was accurate and hedging profits when I did was the right thing to do. What I am looking for now is a test of the 50 day MA currently at 1408 and rising and maybe even a test of the 200 day MA at 1356 if the bears get lucky. It all depends on how pessimistic the market will get and I think if we see follow through selling tomorrow, we'll see the trend average start acting as resistance on counter rallies. Adding to the bearish side, a "handle" (from the cup and hold pattern) should form in Gold and I think that goes in line with the stock market. Additionally, there is a bearish cross on the daily MACD so as long as the trend average gets respected, I expect downside.

I'm glad I stuck with the TA yesterday and not on the pattern. My hedge is finally paying off..

Long Term Portfolio: 100% Long
Short Term Trading Strategy: Hedged with VXX @8.98 as of 09/13

Short term trend being challenged

The market finally closed under the Trend Average after closing every single session above the TA since late July so perhaps it is finally time for some pessimism in the market. And another closing under the TA tomorrow, specially in a stronger bullish wave would change the short term trend to the downside. With that being said, the pattern I posted on Friday about is still there and now we have a bullish cross on the MACD. So the market is aligning itself for a rally. Had the market closed above the TA, I would have sold me hedge to stay long as it would be an almost for sure rally. But I am sticking to my hedge until the market trades above the trend again.

Long Term Portfolio: 100% Long
Short Term Trading Strategy: Hedged with VXX @8.98 as of 09/13

The market put in a slight higher high on Friday and it formed an inverse head and shoulders that targets 1482. However, there is now a bearish crossover on the MACD so we have a similar situation to Thursday where there are cases to be made for both bulls and bears. However, the main indicator I use which is the trend average continues to climb and like I said a few days ago, if we get the TA tested (which it did on Thursday) and it holds then it leaves the market room to go up. I am hedging still as I think a more substantial correction is due in order to bring people on the sidelines on board.

Have a great weekend!

Long Term Portfolio: 100% Long
Short Term Trading Strategy: Hedged with VXX @8.98 as of 09/13

Bearish W2 or new high?

The market gapped down this morning to 1449, which was close to the level I was looking for on a correction. However, the market recovered right away and this is one of those scenarios I find hard to predict. Looking at the pattern, the wave this morning was clearly bearish impulsive and the bounce could well be a W2 counter rally, which would lead to a very bearish wave next. However, I see a bullish cross on the MACD and a comfortable close over the trend average so this could be a wave that will challenge the 1475 high after a correcting for 5 sessions. And as I've said before, whenever we see these mild corrections that correct mostly in time, it gives the market time to consolidate and launch a strong bullish wave. So no idea what tomorrow will bring.. I am maintaining my hedge mainly because the 38.2% Fibonnaci retracement for the wave was not hit at 1444 but I have to admit I'm not too comfortable holding the hedge

so we shall see what tomorrow brings.

Long Term Portfolio: 100% Long
Short Term Trading Strategy: Hedged with VXX @8.98 as of 09/13

Corrective B wave

The market retraced in what looks so far like a corrective B wave and if today's high was the top then we can expect a C wave to the 1445 area or just below the trend average and right around the 38.2% Fib retrace. However, if we get a strong wave that behaves more like a bearish Wave 3 then I'll change the count and assume this is going for the 50 day MA. But for now, the bears seemed scared to come out so if the TA holds I wouldn't be surprised to see 1500. Also, I wanted to point out that gold is forming a nice "cup" for the cup and handle pattern. I didn't get in gold this time but if we get a confirmed "handle", it will be a nice trade.

Long Term Portfolio: 100% Long
Short Term Trading Strategy: Hedged with VXX @8.98 as of 09/13