Market Update

The market finally had a somewhat substantial pullback today after rallying for almost 2 weeks with very minor corrections. There are many ways to interpret this pullback but I am going with a W4 unless 1704.95 gets breached. The reason I am not labeling this the top of W3 just yet is because of the micro count that starts from 1681. A normal 5 wave impulse calls for 1740 from 1681 so we'll see early next week if this comes through. I ended selling my VXX position at a minor loss since it was hovering around my buy price despite the market being down for 2 days in a row. But the plan is to buy it back even cheaper if that new high comes to fruition. Trading VXX is like playing with fire, so I am extra careful with this one as this as speculative as it gets. And btw I wouldn't recommend UVXY or TVIX (leveraged VXX) to anybody, they are so risky and the decay so substantial they should be illegal.


Have a Great Weekend!

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 market made a marginally new high early today and retreated in what seems like a micro W4. So my assumption is there will be more upside after this micro W4 is done. The market is overbought and could use a good correction in price or time to find a base to rally from as the main issues that were holding the markets (Syria and Taper) are now off the table. In the longer term, it looks like the market will go for 1790 if the waves evolve into an Ending Diagonal or Rising Wedge which are common in 5th waves or 1900-1950 if the market rises in a regular 5 wave count. Crazy how much the market has advanced in less than a year.

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. 

All time highs and more to come

The market made an all time high as I had been expecting but failed to reverse since the news were just "too good" for the market to correct. Looking at the count I see an extended 5th of W3, so maybe we'll get a micro W4 and then another high before working out some of the euphoria. In the meantime, the Trend Averages and the 50 day ma continue to rise and perhaps the market will go for the test of the TA or the 50 dma when they are closer to 1700 which has now turned support. The NYMO is off the charts (hasn't been this high in over a year) and in the past it has signaled a correction and then a bull run and in other cases just a continued run. So now that pieces are falling into place, the bullish W3 scenario is very likely and a test of the key trends will be a good time to get in and enjoy the ride. Obviously only if the market continues with the bullish trends.

I ended selling VXX for couple of months worth of Starbucks and bought it right back after the announcement was made. I will sell it again when we get that trend test or on a good profitable spike.
My long term account looks pretty good so I hope this bull run continues, Rapa Nui I am coming.

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. 

Reversal day tomorrow?

The market has technically put in the final micro 5th wave in and there is a good chance we see a reversal day tomorrow. Looking at the count it seems like it is only the W3 wave ending so we should see a W4 correction. However, I've seen in the past how nested counts merge towards the end of the wave into one so there is also a chance all 5 Waves are in. The NASDAQ made a 13 year high and the SP500 is just a few points away so we'll see. If we hadd the length of W1 to W4 within the W3 structure, we get 1708 as a target so right at resistance.

I bought back VXX today in expectations of a reversal. The excuse to take profits is there (Taper) and I think it is reasonable to expect a test of the 50 dma on the pullback.

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. 

Cup and Handle Formation

Last week I speculated on a bullish Monday and that's what we got today. Technically, a 5th wave of what appears to be a W3. However, it's not fully clear if there is another W4 correction before another final W5 since this W3 is part of a nested set up. Also, one thing to keep in mind is that the ES S&P500 made an all time high on Sunday night and I don't remember the last time the cash market failed to match a higher high or lower low made in the pre-market. So my expectation is an all time high sooner rather than later. Lastly, there is a potential cup and handle set up targeting 1770 so we'll see if the market follows the trendlines drawn on the second chart. With today's price action the intermediate trend turns bullish again, so all signals are bullish and perhaps we'll get a correction to the TA or the 50 dma and see the market take off from there?

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. 

Bullish Monday?

The market seems like it is finished or about to finish its W4 consolidation, setting itself for a bullish W5 early next week that should target the all time highs at 1709. But first the resistance at the 1697-1700 level will have to be dealt with so we'll find out soon if the market has enough momentum to push through these levels. I find it interesting that markets are basically at an all time high just 5 years after Lehman Brothers collapsed (5 year anniversary is Sept 15), very few people were able to predict the financial and market collapse in 2008 and not many expected the markets to rebound the way the did in just a few years. In a way it almost feels like it was just an average event in history when in fact it was probably a once in a few decades event. I guess a good question to ask ourselves now days is are we better off today than 5 years ago?

Anyway, I will attempt another shot at VXX if we get that bullish W5 early next week. What comes after the top is really anyone's guess but I personally lean towards s continuation of the bull market as long as ALL trends get back to green, which implies any correction that we get will find a bottom near the Trend Average/50 day ma.

Have a Great Weekend!

Main S&P 500 Trends*

Short Term Trend = Bullish

Medium Term Trend = Bearish 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.

Consolidation

The high for the W3 is in and the bearish action today looks like a normal consolidation before another push up. However, this W4 has been very shallow so far so I wouldn't be surprised if we are going to have a similar scenario to earlier this year where we had a series of W4's before finally topping at 1687. As I've been saying for the past few days, as long as the bearish catalysts are seemingly under control (Syria and Fed tapering), the path of least resistance is up as not only the US economy but the world economy seems to be gaining traction. Ideally, the world would enter into a period similar to 2005-07 where the world economy was running on all cylinders. I remember there was an issue from The Economist about what could possibly go wrong at that time given how seemingly great the economy was.. Then came 2008 and we all know what happened. So if we do indeed enter into this "good" period again it will line up well with the long term count and perhaps we won't see another recession until 2015-16? just in time for a Fib retrace of the entire wave from the 2009 SP500 666 low. Best imo is to be fully invested in the markets while the long term trend is up.

I ended up selling the VXX position for coffee money, for 2-3 cups of coffee literally. I was hoping for a 10-15 drop but the market had a hard time doing even that. So no point in fighting the short term trend until the 5th wave appears targeting the all time high.

Main S&P 500 Trends*

Short Term Trend = Bullish

Medium Term Trend = Bearish 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.