Market Update

- For some reason this post was not published yesterday when I intended to post, I just realized now that it did not post. And no I did not tweak the count to fit what's happening today :-) -

The market made it to the resistance level I had been expecting and it seems like there is a new 5 count starting. However, there is also the possibility that there is a more upside up to the 1705 level before reversing so we'll find out in the next session or two. And obviously this could be a bullish W3 as well but I don't think that is very likely. For trading purposes, I am assuming this is a bearish 5 wave count despite the near invalidation on the counter rally but anything less than a strong bearish wave tomorrow and I will probably cover the SH position I bought today at 1695.

If you haven't taken the sentiment poll, please do so at:

http://trendingwaves.com/forum/viewtopic.php?f=3&t=4

Main S&P 500 Trends*

Short Term Trend = Bullish trend being challenged

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.

Lower lows ahead?

The market follow through today with the 5th leg of what should be an A or W1 and counter rallied the rest of the day in what I see as a micro 5 wave, so perhaps we will see an ABC pattern that will challenge 1697-99 and the Trend Average in the process. As in the past, we have seen simple 5 wave corrections that were followed immediately by rallies so one has to be ready for more upside in case 97-99 breaks. But odds favor further downside, specifically if the bounce is stopped at the 97-99 area then we should see a 5 wave structure to challenge 1676. I had been expecting this correction but we still don't have enough to know whether this is a W4 that will be followed by a bullish wave to an all time high or a W2 that will be followed by an much higher high.

My plan was to go long today at 90-91 but since the gap took the market down to 1685 support I went long there and sold at the end of 5 micro waves at 1693. My VXX position has gotten better but still underwater so in the meantime I will have to subsidize that position with my other trades.

And if you haven't taken the sentiment poll, please do so at:

http://trendingwaves.com/forum/viewtopic.php?f=3&t=4

Main S&P 500 Trends*

Short Term Trend = Bullish trend being challenged

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.

More downside to come or just another correction?

The triangle the market was following yesterday failed to hold today so I am switching back to the count from last week with 1709 as the top for 5 waves completed from 1682. Also I am watching this bearish wave to see if it completes a 5th wave to the 1690-01 level, a 5 wave count would increase the odds of a bigger correction. But the ultimate indicator obviously will be the short term trend so we need to see consecutive closes under the Trend Average. If we get the bearish signal the level to watch will be 1676 as a break of that level will mean the market will likely be headed to the 50 day ma.

I am holding the VXX  position and will probably add longs if we get a 5th bearish wave tomorrow to trade the bounce.

And if you haven't taken the sentiment poll, please do so at:

http://trendingwaves.com/forum/viewtopic.php?f=3&t=4

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.

One more bullish wave left?

The market corrected today by "selling off" in the morning but spent the rest of the day working on a possible triangle. Which means the 5th wave completed on Friday was for a W3 and we saw part of a W4 today. So we should see a higher high coming in the next session or two to complete the structure from 1676 and then start a larger correction. The economic environment seems somewhat optimistic and gradual improvements around the world will continue to support the market going higher. All this QE and low interest rates will end in the not too distant future and send the markets into a major correction but in the meantime the path of least resistance is way up, so one has to position oneself accordingly.

I ended up closing my SH position again for yet another minor profit as Friday and leaving the VXX position intact. I will be buying back SH to hold for a while towards the end of the 5th leg.

Please vote on your market views for August.

For July, despite a majority bearish sentiment the markets ended up going up 2% since the time the poll was initiated.

August Market Sentiment Poll

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.

Stronger correction next week?

The market put in a W4 as expected today and rallied past yesterday high which technically satisfies a 5 wave count from 1682. The ideal projection for the end of this 5 wave count would be 1714-18 (re-calculated it today) so this last wave has room to go but with 1709 meeting 1.618 of W1 (1560-1626), the market is ready to go into a W4 correction that could end up testing the 50 day ma as soon as next week. This has been quite a rally that started with no news so I think it's about time for the market to take a break.

I ended up selling my SH position for a small profit today and bought back at 1709 at the end of the day. My VXX is horrible but I got the stomach for it, maybe it will start go up in the next week or two.

Have a Great Weekend!

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

I have been driving most of the day but I am finally back home (drove 800 miles in the last 24 hours) to go over the crazy waves we just had. First of all, I did not see a break out coming at all based on all those choppy waves, oscillators and the Trend Average. The only one thing that was  technically bullish was the Inverse Head and Shoulders (which target was met today with today's high) but as I said a few posts ago, they typically are straight 5 wave counts and not something as corrective looking as this. In fact, I have to sit down and think about how to label the mess. But to simplify things, I am just going to focus on the micro count that has cleared waves and that is the one with the 1682 low. Assuming there is a 5 count from 82, then we should see this particular wave at 1719. Now, presumably that should be a W3 so if the structure follows a more normal path then an even higher number should be expected. With that said, I have 1711 as a 1.618 level or the ideal end of a W3 of a structure that started from 1560 so we'll see what the market does if it reaches that level.

I ended up adding the other 50% to the short/hedge position at 1707 but I will be taking profits on anything less than a substantial impulse down and will buy back the position on rallies. The market did the exact opposite of what I predicted yesterday but one thing I am sure is that a test of the 50 day ma is very likely once the remainder of the waves are in.

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.

1676 to be challenged

The market gapped up again today in what seemed like it was going to be a bullish W3 but as soon as it hit the rounded top trendline the wave reversed again overlapping the previous impulse wave and closing the day in red. And now that we have all these waves in place, I am labeling them a double zig zag to form a B wave and we should see a bearish C wave coming as soon as tomorrow to test 1676. However, if we go by the wave I have labeled as W1 from 1698 to 85, then the 5 count  projects to around 1660-65 which happens to in the area of 1.618 of A wave. Also, the 50 day ma is at 1646 and rising a few points per day so that might ultimately be a target as well. 

I ended up holding to my VXX but did not add so the plan now is to sell at a profit (hopefully since one never knows with this thing!) at the completion of the 5 waves and load back up with SPY. And from now on I will be trading VXX only at 5th wave completions, it is crazy to see the VIX shoot up while this thing goes down with a mind of its own.

Main S&P 500 Trends*

Short Term Trend = Neautral Leaning 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.