Bearish 5 wave count

The market failed to bounce as I was expecting and instead it put in lower lows and lower highs, which implies further lower lows ahead are likely. The choppy bearish micro 5th wave count was valid for what now seems like a bearish W3 and the bounce yesterday looks like it was a W4 counter rally. So I am giving a bearish count to the micro waves that followed the high of the day and we'll find out tomorrow how this wave evolves. If the micro wave count is correct, it implies a target in the 1620-25 area which would complete a bearish 5 wave count from 1709 to possibly form an A leg. Which would make this a W2 correction from the 1709 high and no longer a W4 I had been hoping for.

I closed my Google longs for another nice profit despite a somewhat bearish market and I am hoping the market will drag Google down tomorrow so I can re-enter that position. For now I am all cash on my short term trading account.

Main S&P 500 Trends*

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.

Inverse Head & Shoulders targets 1672

The market seems to have found a bottom today to start its counter rally and so far it looks like there is a W1 wave finished on the micro count. Also, there is an Inverse Head and Shoulders pattern that targets 1672 which is about the area the Trend Average will be tomorrow or Thursday. What happens after the test of the TA should decide the rest of the month as failure to recapture will mean lower lows ahead. As it is the market has an ABC finished and it would be ideal for a W5 to start here. But that is all up in the air until the short term trend signal confirms it. Also, one possible scenario that might be in the works is a bigger IHS with 1670-80 as the first shoulder so I will be on the look out for that one.

I was tempted to trade the micro count but I am just going to stay put and wait it out. Maybe when we get to the target range I will be able to buy back the VXX I sold last week at a better price? we'll see.. lastly, I wanted to clarify something about my post yesterday on the ads on the site. I realized most people don't know that most of the ads you see on the web are served on the Google adsense platform, in fact I wouldn't be surprised if 80-90% of web ads are run by Google. So when I said I made more money trading Google than ads, I meant their (Google) ads. Google's dominance on the web is what will make this company eventually more valuable than Apple imo. Unlike the MSFT vs APPL rivalry or INTC vs AMD, Google has no competitor.

Main S&P 500 Trends*

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.

50 Day MA

The market closed again under the 50 day ma and at the day's low which is a warning sign to people holding longs in this market. However, I see a 5th wave that sort of resembles a descending wedge so I put some labels on it and we will see if the market follows it tomorrow. Odds are we will see a counter rally to the TA since the market is very oversold so I am positioning myself for this move.

I sold all my longs today when the market failed to recapture the 50 dma but I bought back Google after hours for a better price. Google did fairly well and I made more money trading it than from all the ads on the blog in one month, so we're off to a good start :) I sold my short term FXI longs for a decent profit too but keeping my core long term position intact for the foreseeable future. So should the market test 1626 without bouncing (which I think is slim at this point), I will add to the Goog margin long position using FXI proceeds.

Main S&P 500 Trends*

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.

Rally to TA next week?

The market tested the 50 day moving average and key support today and spent most of the day hovering around that level but closing slight under the 50 dma. The market is now oversold enough imo for a decent bounce and we might just see a rally as soon as early next week to the Trend Average. The market has retraced enough for a W2 of LT Int W5 but I am still leaning towards this being the W4 of W1 of LT Int W5, specially since a rally from these levels would make a good 5 wave count if it ended around 1720-30. So we'll just have to wait a bit more to see what is the bullish response to the "sell off". I've read about the Hindenburg omen and the start of a major correction and so on but just as I've been saying on every single correction, let the charts speak for themselves and see how the market deals with the TA as that is the main catalyst. That and the fact the count we've followed here has worked for couple of years already and made us money.

I bought Google as planned, so now 50% of my margin is long FXI and GOOG. This is my first time owning Google but this is one of the few companies I wouldn't mind owning for the next 10-20 years as their dominance will continue to grow. So maybe I will make it one of my preferred trading stocks.. we'll see.

Have a Great Weekend!

Main S&P 500 Trends*

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.

Market Update

After almost 2 weeks of bouncing around the 1680-85 - 1700 level, the market finally made a substantial move. The Head and Shoulders pattern proved valid after all and the TA signal was right on the money as it finally turned red yesterday. Unfortunately, my "instinct" was off by closing the hedge position yesterday but it's all good as profit is profit and these moves allow for trading opportunities. So now that we got this "sell off", the count looks a little more clear and we have the critical 50 DMA very close. The move from 1709 could be an ABC with the C wave being complete or almost complete, alternatively this could be a W1-2-3. I still think 1709 was the W3 of W1 of LT Int W5 so we are still in a W4 unless 1626 gets breached.

I am keeping my FXI longs and will be adding Google if we get another 50 day ma test at 1657 (I was asleep as usual so I failed to notice today's low came within 1 point of the 50 dma so this might be it). Also, I'm sure I will revisit VXX eventually when it goes back down from my exit price.

Main S&P 500 Trends*

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.

Short Term trend bearish confirmation

The market is now back again in the 1680-85 level for the 8th time since late July but this time the Short Term Trend is bearish due to the TA turning down, so we'll see if the bears are able to break this fairly robust support level. The TA signal usually gets whipsawed on W4s so I wouldn't give it as much weight as I normally do and the potential 5 wave count I posted about yesterday still remains in place until 1682.62 gets breached. The market has obviously been in a correction for a while but so far it has corrected mostly on time and little on price and unless there is some major excuse for a stronger bearish wave, my guess is that even of we get a "sell off" the 50 day ma will likely hold.

I sold my VXX again at support early morning for profit and will be looking for another entry point for position trading.

Main S&P 500 Trends*

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.

New 5 wave count to 1700+?

The market managed to test the level I mentioned yesterday for the 7th time to bounce right off. But this time there is a a chance the bounce wave could be a bullish W1 so we'll have to wait for the wave to complete and see what the reversal looks like. So far it looks like the W3 of this bounce wave is done (one could argue for a complete 5 wave micro structure) and the retracement towards the end of the day was its W4 on the micro count. And as I said yesterday, the 1680-85 level holding is a good thing for the bulls and the longer it takes to break the 1680-85 level, the higher the chances we will see a rally to challenge all time high. Looking at the fundamental picture, the fairly positive numbers coming out of Europe, China, Japan and the US sets a floor to the likely correction in the US markets once QE is taken off. And perhaps we will indeed see SP2000+ in the next couple of years. Now, if China would just double from here during this time I'd be a retired happy camper :)

My FXI position I took in June is finally looking good but instead of closing it to take profit I chose to buy back the VXX position to hedge it. But I'll continue to position trade VXX until we reach a point where I can hold on to it.

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.