Flat or correction over?

The market has been bouncing on what seems like a B wave from the 1623 low and it has now retraced most of the initial sell off. So I think the market is either putting in an ABC Flat correction or a bullish W1.  If this is a flat then prices should stop rising at the 1635 level and then head down to 1623 and resume the rally. But if this is a W1, we should see the 1626 level hold for a W2 and then up from there to about the 1650 level, which goes in line with the Cup and Handle projection from couple of weeks ago. I have been able to call corrections fairly accurately over the past year but it's very hard to tell which one ends up being a "top", so I will be watching key levels in case the market continues rallying and adjust my hedge accordingly. 

I traded in and out my VXX position couple of times for a minor cost improvement and I was originally going to close the position and wait until Monday. But since I've been able to improve my cost average substantially since the 1597 short squeeze, I figure I'll stop loss the position if the market makes it to 1637 or better yet sell at a profit at 1623. Good thing I also have a long position to make me feel better when the market refuses to go down..

Have a Great Weekend!

Main S&P 500 Trends

Short Term Trend = Bullish

Medium Term Trend = Bullish

Long Term Trend = Bullish 

Short and Long Term Trades

Market Reversal

The correction I was expecting seems to have started now that we have a reversal day and the first negative day since the break out from 1598. But the market did manage to put in another all time high despite selling pressure early morning and exceed the Bull Flag target from last week. At one point it seemed like the market was reversing the selling and starting a new bullish wave but with 1626 breaking, it now seems likely that there will be more downside. I am looking as I posted yesterday at the 1612-1618 level and the Trend Average. Technically speaking, the high today got close enough to the "ideal" target I have for the market for May, so should the market make a solid break of that 1612 area then it might be the beginning of something bigger but at this point I lean towards higher highs before a "top".

I ended up selling my VXX for a profit but ended up buying it back at a higher price when I saw 1626 break, so my cost has gone up a few cents which is still not too bad.. considering I will sell it at $19.75-20.00 :)

Main S&P 500 Trends

Short Term Trend = Bullish

Medium Term Trend = Bullish

Long Term Trend = Bullish 

Short and Long Term Trades

Correction is coming

The market has made it to the 1630's as I had been patiently waiting for and now that the bull flag target is technically satisfied and Wave (V) on the WIII is equal in length to Wave (I) on the micro count, I expect a correction to start as soon as tomorrow or early next week at the latest. The ideal support for this bearish wave would be the 1612-1618 area before launching one last bullish wave fueled by people who are coming late to the party. Unfortunately, this is where many amateur investors will get burned as they miss most of the rally and then they try to rush in only to be left holding the bags. It's a mean world but that's how lessons are learned.. I find it interesting fearmongers like Marc Faber, Roubini, etc. get lots of attention during corrections and that prevents average people from buying stocks when they are actually cheap. I was just looking the other day at this page where Marc Faber states he is "100% sure of a recession by 2013" (How can this man be 100% sure is beyond me.. I would cut him some slack if he would have said at least 99% but no, he is a fear mongering genius) and if you look at the poll on the left side, close to 80% of people agreed with him.. that's 80% of people who probably have missed the entire rally and now are kicking themselves in the behind.

Here is the link:

Marc Faber: 100% Chance of Global Recession

http://www.cnbc.com/id/47566735

Anyway, today I bought back all the VXX that I sold earlier in the week at $18.31. Not in the 17's as I had hoped but nonetheless a good price and much cheaper than when I sold. So I'm hoping to squeeze a dollar out of this one.

Main S&P 500 Trends

Short Term Trend = Bullish

Medium Term Trend = Bullish

Long Term Trend = Bullish 

Short and Long Term Trades

Almost there?

The market continues to make all time highs as expected but this particular bullish run is about to correct so maybe some more upside and the we'll see a test of the Trend Average. I'd prefer to see a gap up and a clear reversal so we can have a good corrective count. At one point this morning I thought a reversal was taking place as the bullish gap was closed but instead previous support held and the market just went back up. So maybe that bull flag target might just complete in the next session or two.

I position traded VXX again for another minor gain and should VXX stay this low, I will be locking it in a good price. The low today was $18.06 so almost in the 17's and I think a gap up or something that will scare shorts will send it to the 17s.. I will load up regardless when the market meets its pattern target or if I see a confirmed reversal.

Bull Flag

The market consolidated today as expected and it seems like it's buying some time before launching to yet another high. There is a bull flag in place that targets 1634 and it was already there on Friday but I forgot to mention it. So I am expecting the 3rd wave to finish at that level, consolidate some more and then launch a final bullish wave. Technically speaking the 3rd wave could have ended today as a higher high was put in but until I see a significant retracement, I will assume the target is 1630's for the w3. The Trend Average is now closing in on 1600 and it might even catch up to the market instead of the market going down for a test.

I traded the VXX position again for a minor gain and perhaps I will buy back the position in the 17's. Today it dropped almost from 50 cents from the price I sold it on Friday so hopefully we will see the cup and handle pattern complete or at least see the market get to the ideal Int W5 target. I am hoping to buy a new yard fence with VXX money :)

Main S&P 500 Trends

Short Term Trend = Bullish

Medium Term Trend = Bullish

Long Term Trend = Bullish 

Short and Long Term Trades

Short Squeeze

The market ended up going to the 1614 area as I expected but it forgot to correct to 1586 first for the trade set up I had in mind, so the short squeeze that I posted about earlier in the week materialized today when the 1597-1600 level broke. And now that we are above 1600, the end for the wave that started at 1345 is coming fairly soon. The first revised target I had for this Int W5 was 1617 which I posted last month but now that this W3 wave has already reached 1618, I think the second revision of 1642-1668 is more appropriate and it goes well with the Cup and Handle Pattern in play, the "ideal" target given the 1536 Int W4 low and my statement from the first day of the year:

And now that the picture is clear, the market is now going to play catch up with the rest of the world, so I am expecting 1475 to be taken out fairly soon and perhaps see the all time high being challenged by May 2013. The Bullish Engulfing Pattern is confirmed and all the 3 trends I track have turned bullish with today's move, so as long as the trends stay there we should see a bullish January. 

Once we reach the LT-W3, I expect a mild W4 in the summer. So perhaps a correction to the 1536-39 area or the 200 DMA (which would be ideal if the 200 DMA was around 1536-39) and then the start of LT-W5 late summer/early fall.

On my VXX hedge, I miscalculated and got squeezed for breaking my own stop rule yesterday. But I managed to improve my cost average a little and I am out of the position until the W3 is finally over so I can hopefully recover all the loses there and perhaps makes a little profit too. The HSI seems to be finishing its Int W1 and it seems like the SSEC will soon follow, so hopefully they will keep rallying as I need my FXI to hit $50! lol.

Have a Great Weekend!

Main S&P 500 Trends

Short Term Trend = Bullish

Medium Term Trend = Bullish

Long Term Trend = Bullish 

Short and Long Term Trades

Watching 1586

I was expecting a counter rally today in form of a B wave but this wave looks a little more bullish than usual and it closed right in the area where the short squeeze I talked about few days ago could happen. So while I still hope this is just a B wave of an expanded flat, the market could be putting in a W1. So I am watching the 1586 level carefully, which should coincide with the Trend Average tomorrow. If this level provides support, I expect 1614 on the bullish response. Ideally, I'd like to see a 1.618 C wave so we can have a proper Fib retracement and then see a rally from there since I'd like to see the market correct so we can have a clearer 5 wave structure for the Int W5.

I ended up buying VXX but did not stop out at yesterday's high as I had originally planned. I figure we should get at least a correction to 1586 before going through the 1597-1600 area, so I hope I am not miscalculating. And should the market sell off per the several bearish scenarios floating around then it's all good too. But I have to admit being hedged here (never mind being short) makes me somewhat uncomfortable as I don't want to get caught  in a short squeeze stampede.

Main S&P 500 Trends

Short Term Trend = Bullish

Medium Term Trend = Bullish

Long Term Trend = Bullish 

Short and Long Term Trades