Market Update

The ABC wave was confirmed today and we have a potential set up for more downside, potentially targeting 1600 if the bearish wave today was a W1 . But as I said yesterday, the market has to deal with the 1620-26 area first and I suppose what we get next week will depend on what decision the Obama administration takes on Syria. Which so far looks like a limited strike after the UN inspectors leave and possibly after labor day. Personally, I feel the administration should get congressional approval to do this as our representatives should have a say in this since citizens can't do a referendum. But I guess it's just wishful thinking as the executive branch does pretty much whatever it wants now days. I just hope this doesn't come back to hunt us in the future. I can't think of anything positive that has come out from US intervention in the Middle East since the 80's.

Anyway, no trades today as I prefer to see the market's reaction after a decision is made. I believe wave analysis and TA can gives traders an advantage during normal market conditions. But trying to predict siginificant future events with these tools are no better than a coin toss. 

Have a great and safe holiday weekend!

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = 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.

Corrective bounce

The market rallied somewhat early morning following the 2 possible counts from yesterday and the reversal later in the day implies an ABC pattern, so the micro 5 wave count is off. However, there is a possible bullish nested 1-2 but I think it's best to be cautious here as two of the trends are in red. Should the market put in another bearish leg the number to watch is 1626, also the base where the rally started last month was 1620-25 so that level might offer a good opportunity to go long if it holds. I ended up selling Google for a profit in case we had an ABC in the morning, which is what ended up happening. So I will be buying back Google at support or shorting through VXX at the test of the resistance near the 50 day ma. But for now, I am cash on my short term portfolio.

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = 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.

New 5 wave count or ABC

The market bounced as expected and alleviated yesterday's oversold condition and I see on the micro-count a potential for a new 5 wave count targeting the  50 day ma. But obviously if the bearish wave is not done then we could just get an ABC move and the see the 1626 level tested. Also, since it's been now almost a month since the 1709 top was put in, I am inclined to label this wave a W2 and for a better perspective I posted a longer term chart today. Notice how the RSI and the MACD are already at similar levels as when the market found a bottom at 1560. This doesn't mean the market will start rallying right away but the base to launch a similar rally (1560-1709) is in place. Perhaps the Syria situation will be the catalyst of the market's next big move and it looks like Obama is taking a page from Dubya's book and will launch an unilateral attack.. not a smart move if you ask me. In times like this, Ron Paul makes a lot of sense.

I didn't trade today as I am waiting for Google to reach $900! lol.

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = 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.

Intermediate Trend is confirmed bearish

I was expecting the market to go down yesterday and down it went. Now that we have this wave, the count looks better with the recent 5 waves that were finished as part of a W3 with the high yesterday as W4 and now W5 which should be ending soon. Also, the Intermediate Trend is now solid red so we have both the short term and intermediate in red which warrants even more caution in rallies that fall short of recapturing these key trends. The key 1626 level I mentioned last week has yet to be breached despite the sell off so we'll see if that level will hold further bearish advances. Now, on the reasons we're selling off which are primarily Syria and the debt ceiling. I think these are just good excuses to correct, we've seen many of these types of of events in the last few years which usually end up being non-events as far as the stock market goes. Personally, I hope they let the UN do something and not the US acting alone again! the human tragedy over there must be accounted for but last time I checked I thought the main purpose of the military was to protect the homeland not policing the world.

I missed the first sell off last week by selling VXX a day too soon but this time was different. So I sold VXX around 1635 and went long Google again for a much better price than I sold last week. I will add more longs if we get to the 1626 level, if not then looking to sell on a test of the 50 dma or 1670.

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = 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.

Intermediate Trend being challenged

The market had a reversal day today for what seems like part of a zig zag or perhaps a bearish W1. The close was very bearish given the market lost the trend average and the 50 day ma and now the Intermediate Trend might turn red as well so unless the market rallies hard and overcomes the main resistance area of 1680-85, chances are the lows will be revisited. Nonetheless, the market has been correcting over 3 weeks and is potentially setting up a base for a bigger rally. But for now, we'll let the trend guide us through the turbulence.

I bought back VXX at a better price at 1667 and keeping it until the market trades above the 50 dma or tests the lows for this month.

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = Bullish trend being challenged

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.

Close above the 50 DMA and TA

I had a very busy day yesterday but I finally got around to look at the charts today. The market did not retrace for a right shoulder for the potential IHS as I was hoping and instead it has continue to climb. But most importantly, the close was above the 50 day moving average and the trend average so more bullish momentum could turn this into a full on rally if we go by those factors alone. Looking at the waves, we have 5 waves down of what could be an A or a W4 correction (since 1626 did not get breached), which implies we are either on a B wave or the final W5. Alternatively, the recent low can be a W2 of the LT Int W5 that targets 1800-1900. Whatever the case. the trend continues to be up for both long term and intermediate so I am expecting higher highs. This all goes in line with the fundamental picture for the world economy which seems to be gradually improving. Lastly, I wanted to clarify what I meant about the how the signs of a recession is what will cause the market to eventually sell off. I know many people feel fundamentals are lag indicators and they are technically right, but what I should emphasize on my statement is on the "sign" part. Usually, the stock market starts selling off before the recession officially occurs and by that time it is already too late to get out. But in looking for signs, I am looking at unemployment claims, monetary/economic policy and consumer related reports. I remember back in early 2008 the Bush administration was sending out $200 to everyone as an "economic stimulus"(and some people thought it was out of the goodness of the heart). That to me (in addition to other reports) meant the recession odds were very high as it seemed to me as a last ditch by the government to prevent a recession but we all know what happened next. So next time recessionary forces resurface, we will see similar signs and that coupled with trend confirmation will save people on here a lot of money. But in the meantime, as I said the other day, the markets will continue to go up until there are any hints of a slowdown.

I ended up closing my VXX position at a loss once the market crossed the 50 DMA. I will reconsider buying if the market gets up to the 1680-85 resistance.

Have a Great Weekend!

Main S&P 500 Trends*

Short Term Trend = Bearish 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.

Market Update

The market did not follow through with yesterday's selling in the cash market today. Instead, there was relatively more substantial downside in after hours trading prior to the China and European PMI release. So it seems likely the bottom is in for the wave from 1709 and a pullback tomorrow sets up a potential IHS pattern again. This coming counter rally could be a B wave or the start of a 5th wave since 1626 was not breached, so we'll keep an eye on how the market deals with the 1680-85 previous support which is now resistance. I know some are questioning whether the rally is over but as I have been saying for for quite sometime, as long as the economy shows no sign of recession the markets will continue to go up. To be specific, the market should go up in tangent with the rate of GDP growth + Inflation more or less.

I bought back VXX around 1656 today so I hope we'll get the retrace for the right shoulder of the IHS tomorrow.

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.