Intermediate Trend is now Bullish

The market gapped up today as expected and reached the 1674 target and some more. I see enough waves to start at least a W4 correction but I think it's about time for the market to put in a stronger bearish wave to digest gains and then continue the run. There has been 3 bullish gaps in 1 week and the SP500 has gone up 60 points from the day I changed the short term signal to bullish so the market is very overbought. However, since 1687 is so close, I wouldn't be surprised if bulls make a run for it. Whatever the case, what I am focusing on is more on what will the next bigger bearish wave will do. A test of the 50 day ma would be ideal and that is currently at 1630 so a proper Fib retrace would get the market there and allow traders on the side to jump in. I am hoping to see the 50 DMA hold and go margin long there (meaning adding new longs to my current long position) and perhaps see 1800 by the time we get another substantial correction. Right now the chances for this wave from 1560 being a B are very slim and I am leaning towards labeling the entire move from 1687 to 1560 a 3-3-5 correction as posted above. The intermediate trend changed to bullish today as well so that favors a bullish run that will last for quite some time.

I shorted at 1673 per my plan from yesterday so hopefully we'll get a bigger corrective wave soon. Even if the run continues I will probably continue to hold shorts until I profit since my longs are overcompensating for any downside from the short position.

Main S&P 500 Trends*

Short Term Trend = Bullish

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.

Market Update

The W4 I had been expecting could have technically occurred today as the market seems to be on a W5 already. I was hoping we would get a retrace to 1637 but instead we only got a very shallow correction with a low at 1647. So going by this W4 low then the final W5 should target 1670 going by W1=W5. However, W3 could also be extending in which case the top of the entire structure could be going for 1687 or higher. If we look at the first impulse from 1560 to 1626, we get 66 points and if this is indeed a B wave then 1604 + 66 =1670. However, if what we have is actually part of the LT Int W5 then we get 1710 and the current wave would be a W3. So anything going substantially beyond 1670 increases the odds of a W3 and obviously breaching 1687 would confirm it.

I went short yesterday at 1649 and unfortunately got stopped in after hours once it became obvious the W4 was already in. But at least the longs make up for any short pain. However I will be buying back the short position possibly at 1674 if it makes it there or just go margin long when the entire structure does a Fib retrace.  I don't think anyone could have predicted this big of a really in 2013 based primarily on QE but this is what the market wants. In a way more so than real economic growth which I find somewhat bizarre but I will go with the trend until it tells me not to. At this rate I am starting to doubt the coming bearish wave will be able to break the 50 day ma support.

Main S&P 500 Trends*

Short Term Trend = Bullish

Medium Term Trend = Neutral Leaning 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.

Expecting W4 Correction

The IHS target I had from last week was met today as I had been expecting from the micro count yesterday and the W3 seems to have finalized at the 1654 high today. But should the market break this resistance, the next stop will be 1661 but for now I lean towards the start of a W4 correction starting as soon as tomorrow to 1637 more or less and then a final W5 to 1660's. I wonder sometimes what are the odds of predicting these market moves without the help of wave counts, I assume without wave counting it'd be extremely difficult to be consistently profitable as a short term trader as there is nothing that can project levels as accurately in my experience. So if you are a mathematician feel free to calculate the odds as I'm actually very curious about the comparison.

Anyway, I am position trading my FXI and went short at 1649 early morning. My automated triggers at TD Ameritrade are disabled for some reason so I had to trade before going back to sleep. Hopefully we'll get the pullback tomorrow for a quick buck :)

Main S&P 500 Trends*

Short Term Trend = Bullish

Medium Term Trend = Neutral

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.

Inverse Head and Shoulder target to be met tomorrow?

The market gapped up today as I had been expecting and looking at the micro count it looks like it might gap up yet again to meet the Inverse Head and Shoulder target of 1648 and the end the W3 of the count I have on the chart. There is resistance at 1646-48 so if that area breaks we could see the market go for 1654 and create the perfect neckline of bigger IHS targeting 1750. Earnings season is here so maybe this will be the factor that will used to continue the rally or put in one more intermediate bearish leg to finish the correction.

I will be position trading tomorrow and shorting in expectation of a neckline but obviously I will be quick to take profits with shorts as it seems like the right trade is on the long side as long as the indicators are bullish.

Main S&P 500 Trends*

Short Term Trend = Bullish

Medium Term Trend = Neutral

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.

Gap up on Monday?

The market broke out of its triangle from the cash market and as I had speculated couple of days ago the right angled triangle formation made the higher high and closed the 1626-1630 gap (finally). The market also seemed to have put in a quick W2 earlier in the morning and an Inverse Head and Shoulders targeting 1648 was also formed, so given all the other bullish factors in place (bullish short term trend, above 50 dma close, bullish MACD crossover) it looks like the market is about to get very bullish early next week. The count I have on the IHS targets 1660's more or less so maybe that will be a good spot to hedge or short and I think the next intermediate wave will either confirm 1560 as the low for the correction or put in the low on a C of Y wave of an double Zig Zag. It will come down to how the 50 day ma holds on the correction, enough time has passed by for bears to make their case and after 7 weeks of trying there hasn't been much of an bearish advance. But this comes as no surprise as all of this had been anticipated in the Long Term chart I posted couple of months ago (I put the labels then in anticipation of the market topping then). But before we get too far ahead of ourselves, let's see how next week trades. 

I tried improving my FXI position but ended the day even, looking to sell it to position trade when the targets are met and go short.

Have a Great Weekend!

Main S&P 500 Trends*

Short Term Trend = Bullish

Medium Term Trend = Neutral

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.

Short Term trend is now bullish

The aggressive strategy (1):

Entry: Take a long position at the third contact with the support
Stop: The stop is placed below the last lowest
Target: Opposite band of the triangle
Advantage: The amplitude of the movement will be important in case of rebound towards the opposite band. The risk is low
Disadvantage: Downward breakouts are more frequent

The aggressive strategy (2):
Entry: Take a short position at the third contact with the resistance
Stop: The stop is placed above the last highest
Target: Opposite band of the triangle
Advantage: Downward breakouts are more frequent

http://www.forex-tribe.com/Ascending-Broadening-Right-Angle.php

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The market gapped down today in the cash market but still remained in the triangle pattern as it failed to make a lower low. The test of the 1597-1601 area that I was hoping for did not come in regular trading hours but again in pre-market trading and the pattern it left is actually more bullish than the triangle in the cash market. So I put up a chart of the ES trading for the last few days so you can see what I am talking about as the cash market chart show only one test of support. The pattern is a right angled triangle with three bearish attempts to break the equivalent of the 1597-1601 low, so given the fact this last attempt could not break support there is now a good chance for the market to close the 1626-30 gap as soon as Friday. Also, the short term trend has now turned bullish and the daily MACD has officially done a bullish cross so unless there's some sort of negative surprise in the next day or two, the path of least resistance is up. We will get the jobs report on Friday and that could be used as an excuse to rally as a weak jobs number could be interpreted as more QE and a strong jobs number as a sign of the economy picking up, a win/win situation as far as using an excuse to move the market.

I ended up position trading my FXI position for some improvement and perhaps I'll get a chance to trade again on Friday if I see a good set up.

Have a happy and safe 4th of July!

Main S&P 500 Trends*

Short Term Trend = Bullish

Medium Term Trend = Neutral

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.

Possible Triangle

The market has technically continued its correction from the 1626 high but it seems to be triangulating, so we should expect a break out of this formation soon. That unfilled gap seems to be a magnet and should the market hold 1597-1601 on another test then it is very likely the market will break out in a right angled triangle, similar to the one couple of months ago with the 1538,1539 and 1536 low. We don't see the 1597 test on the cash market but I am taking into account the low Sunday night so a third failed bearish attempt will be a good spot to go long imo (if that level breaks then I'm going long around 1575). The daily MACD is about to do a bullish cross and that favors a lasting rally, so perhaps the next Int bearish wave will either confirm 1560 as the low for the correction or possibly put in the final low.

I shorted per my plans from yesterday at the 1623-1626 resistance and covered once a 5 wave formed on the micro count. And if I see a similar set up tomorrow I will be doing the same, I rather not risk overnight positions during this time. In fact, I prefer not to risk overnight positions ever if I can make similar gains like today trading intraday.

Main S&P 500 Trends*

Short Term Trend = Bearish Leaning Neutral

Medium Term Trend = Neutral Leaning Bearish

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.