Getting close to correction?

I had a very long day today dealing with legal bills in mediation but I am home and I am done with all my major "to do" projects for the rest of the year, so I guess I can finally relax for the rest of the year. Anyway, the market continued its bull run today which was not all that surprising but I do think we will see a profit correction very soon to the levels I mentioned yesterday. So I decided to add some hedge at 1769 by way of VXX, which I said I would not trade again but the damn thing is so tempting at this price! so I have a small hedge and hopefully I'll be able to squeeze a dollar out of that. I am keeping my long position I bought couple of days.

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. 

Correction to TA?

Now that the market has made another higher high that makes the micro 5th wave look more proportionate, I think there is a good chance we will see some sort of correction starting in the next session or two. If this is the end of the stand alone W3 then a good level for a retrace would be 1740 or basically a Trend Average test. I'd be surprised if we see a stronger correction without another new high but one can never be 100% sure. When the stronger bearish wave comes it will probably be a profit taking correction and not a fundamental change in the economic background that triggers it, so at some point we will see a bottom (around the 200 dma?) and the markets will keep going up and up. The US economy continues to grow, Europe has come out of recession and Asia looks stable so we have a good recipe for a continued worldwide rally in equities and other assets. And this is in addition to a weaker dollar, which probably will end up trading at 1.40 vs the euro very soon. Funny how fast people can forget (EU PIIGS bailouts)..

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. 

New High

It's been now two weeks since the market put in a Bullish Engulfing Pattern and the original target I had that day (1760) has been reached.

"If this is the start of a 5 count then expect 1760 more or less, assuming we see a reversal without taking out the 1695 resistance (which makes W1 around 45-50 points)."

Now the issue is the bullish wave from that date has turned into what I call a stand alone W3, which is a W1 and W3 fused together by a minimal W2 so there was no reversal to speak of. And since these waves are rare and I don't have enough data to project, I don't want to be calling a top before I see some sort of reversal pattern. So far I count two sets of bullish 5 wave counts and today's high could serve as a final 5th. However, this 5th could easily turn into another 5 count so we'll have to see what early next week brings. One thing that I just realized is the dollar weakness and how that might be playing into the stock market. QE aside, usually a weak dollar gives the market a reason to rally since a cheaper dollar translates into higher USD profits and at the same time adds to inflation. So as long as there is a weak dollar in the background and positive corporate earnings the markets will find it easier to make new highs.

I also added the long term chart to put into perspective where the markets are in relation to the count. Note the price labels I have on there were put in before the market top in May and the market has followed these levels more or less. Since we are seeing a breakout of a broadening formation, the usual target for this pattern would be equivalent to SP2000+ once the 5 waves are complete from the 666 bottom. Also, I added a picture I took in China couple of days ago. Those tall buildings in the background are probably half empty but somehow they still continue to build and people continue to buy. I am not sure if it's a product of a command economy or speculation but plans are to make that a financial center in Southern China so they build all these class A buildings and top infrastructure and assume the area will be booming in a few years time. That's not how things usually work but somehow it has happened before in China, in Shenzen to be specific.

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 bounced somewhat today and I am not sure if prices will come down to the TA or the TA will end up catching up to the market as we have seen in strong rallies this year. The market does need to consolidate gains so it will do so in price or in time before resuming another bullish leg to a new high. As it is the market has already come within 2% of the 1790 target I had in May, so in looking at the overall waves the market might be reaching a point where there will be a much longer correction than we have seen in recent months. But given the most recent wave counts, this market is free to extend so no point in trying to guess the top.

I ended up buying back GXC since there's some sort of liquidity concerns in China but it's the same old story. China is interesting in the sense that all the money that disappeared from the stock market went straight into real estate, prices in relation to rental income are completely out of proportion. So it's just a matter of time where all that RE money will come back to the stock market. Yours truly is making a huge bet on it..

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. 

TA Test?

I just got off the plane couple of hours ago but wanted to get this uploaded before getting some rest. Basically, that stand alone W3 is still in play and I think these is a good chance this wave will resemble the wave from January. So I think the TA might get tested but will continue to hold until we get higher highs to satisfy a 5 count. And yes I know many think these market levels are unsustainable and what not but I've heard the same thing since the 1000's (and we are at 1700's!!), so best is to stay with the trend and the let charts speak for themselves.

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. 

Update

I will be updating again when I get back on Wed night as I am having problems access blogger from here. But it looks like the market will be rallying some more as expected.. we will see.

Another all time high

The market continued its rally today and closed again at an all time high. It looks likely to me that we are dealing with a stand alone W3 and perhaps we'll see the W4 early next week before higher highs.  The DOW is lagging behind in this rally and the SP500 could be in an Ending Diagonal but looking at small caps and technology, those markets have broken out of their potential Rising Wedge pattern so the SP500 will likely follow.

The key drivers to the markets now are going to be earnings, so a decent season will add fuel to this rally. I am still waiting for an entry point since the market hasn't not tested the TA and one thing I will remember next time I see a Bullish Engulfing Pattern is to stay long. And as I've said before, as long as there are no signs of recessions or anything that could lead to a recession the markets will continue to go up.

Next few updates will be from Southern China. I have a cold from recent travels and I'm hoping I'll be better by tomorrow night for a 15 hour flight.. 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.