Rectangle Top or Consolidation?

I guess traders did not bother to take profits today but instead have been buying options to hedge as the VIX has gone up but the market remains in a tight trading range. My VXX is actually in the green so I am having one of those rare "eating the cake and having it too" moments. The market is either topping in a rectangle pattern or is simply consolidating again for more bullish waves to come. You guys already know what I think and as I have said before the test will come when the Trend Average gets tested. A successful test and I am out of VXX but waves call for a change of trend so we'll see.. the suspense continues but I am actually enjoying it :)

Have a good Thanksgiving to those celebrating tomorrow.

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

Looks like the correction yesterday was a micro W4 after a micro standalone W3 so it looks like the market is done after putting another marginal all time high before reversing in the last few minutes. After such bullish run in the last month I would think traders would be locking in some profits before Thanksgiving so we'll see. My VXX position is hanging in there so hopefully it will start going up soon, it'll be nice to have some VXX money for Christmas!

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

A correction started today but it's too early to tell if it's a minor degree corrective wave to prepare the market for one more high or the beginning of a bigger correction. So we'll just have to be patient and see how the market reacts when it reaches the Trend Average. Most people seem to be convinced the rally will continue as the VIX is trading near the lows so perhaps some sort of surprise is coming or traders will use the tapering excuse to start selling off the market. I am holding on to my VXX and not adding any more positions. I am not bearish, just mindful of the fact that this market needs a healthy correction to bring fear back. Once you start seeing the doom and gloom gang in the news then you'll know the market has probably reached a bottom and ready to rally. What's interesting is that these permabears never appear when the market is actually topping.

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 start next week?

The market decided to ignore the right shoulder of the IHS I posted about yesterday and went for another all time high today. Technically speaking, there are 5 proportionate waves in from 1746 to make this the last wave of this year's rally. The wave I have marked as V is exactly 27 points or in other words the length of W1. It goes without saying that this V wave could easily extend or maybe even break into another 5 wave count and target the levels I have mentioned earlier this week. I called for a rally off this week's lows but now that the minimum requirements have been met I am expecting a correction to come as soon as early next week (if the V doesn't extend) so I am getting prepared accordingly. The coming correction is going to be interesting as the count I have calls for a higher degree correction and without doing much in depth analysis, my assumption is the 200 day moving average will make a nice target whatever level that might be when the market gets there. As of today, that number is 1644 and rising every day. Obviously, calling tops is an "counter trend" call and they are by nature inaccurate so we'll see how things evolve as these waves start to exhaust themselves. If one would have just followed the short term trend I post and ignored wave counts, technical analysis, etc. one would have out performed the market easily this year.

I ended up selling my short term longs for very little profit since it barely moved from where I got it and picked up VXX at a substantially discounted price (relative to my sell price earlier in the week). And should the market start evolving into a 5 count, I will sell VXX again and buy it back later. These volatility and 3x instruments are extremely risky to hold for longer periods of time. I am lucky I have managed to make some money out of it but I was looking at the charts for VXX for the past 5 years and if one would have purchased $7,500 5 years ago, it would be worth $45 today. In the case of TZA (3x short SP500), if you bought $10,000 just 2 years ago and not sold, you would have $8 today.. talk about decay! they should be banned come to think about it as a larger number of unsuspecting traders end up buying these without thinking. So be careful if you are tempted by their seemingly outsized returns.

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. 

  

IHS in the works?

The market started to rally today as I had been expecting/hoping and based on what I am seeing so far, we could see an Inverse Head and Shoulders or another stand alone W3. If today's high was W1 of W5 then it projects to 1825-30, which is higher than the IHS projection or the 1811-12 "ideal" ending of the wave. We just have to see how the wave evolves and then be ready for a bigger correction. I am keeping my short term longs until I see any signs of a reversal and load up on VXX or a triple short after that (Note that this is only on my short term trading account. I have been 100% long on my long term account for the past 2 years and will leave that intact as this bull market is far from over)

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. 

Trend Average Test

The market put in another bearish leg today that came down to test the TA and close right on it. Going by length of the waves, the "C" leg is equal to "A" so the market should start rallying to finish up the 5 wave count. Further downside that breaks 1773.44 will probably mean all waves are and we will see the start of a higher degree correction. Seems like QE taper will be the catalyst I was wondering about a few days ago, so we'll see how long it will take for fear to make a come back and bring back the "expert" bears who get airtime whenever the market is falling.. but we all know how that goes.

I ended up buying some GXC in hopes the 5th leg will start in the next session or two.

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 continued its correction today and if the bottom holds today, the structure could end around 1811 if W5=W1 which goes in line with a number I posted about two weeks ago as the alternative:

if I break down the "stand alone W3" and pick what I see as W1 then the projection is 1810-15 and if I add W1 points (66) to the low yesterday we get 1812.

So let's see if tomorrow will bring the last wave of the structure and push for a new all time high. I ended up selling VXX once I saw the 1785 level hit in the morning and I will be buying back hopefully at the new high.

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.