S&P500 29.6% 2013 Return

What a year! It seems like it was just yesterday that I was writing about the potential start of LT Int W3 when Joe Biden came up with a solution to the Fiscal Cliff last December 31st. The S&P 500 logged a 29.6% or almost 400 point gain for the year and exceeded even my own bullish count or any other that I saw at that time for that matter. Historically speaking, the year after such big gain tends to be one of consolidation so  I am not expecting another 30% year in 2014 (Another 30% run would put the SP500 at 2400). However, there is a clear possibility that the LT Int W3 is extending and should the LT Int W4 be a somewhat shallow correction, then that crazy 2400 level might become a reality. Also, let's not forget that from a purely technical perspective, we have a multi-year Right Angled Descending Broadening formation that targets 2484. A pattern which was put to the test just less than two weeks ago when QE Taper was announced and which just so happened to test 1850 late today as predicted on that day.

"I see a Right Angled Descending Broadening formation. Basically, it's an inverted Ascending Triangle and the target is 1850 should the market break the 1813 resistance."

It goes without saying that if we were to reach that level in a short period of time we will see a big correction as our GDP growth doesn't justify such huge run up in prices in such short amount of time. So my basic strategy will continue to long the market per trend indicators and hedge accordingly when I see completed structures. This method worked well for me this year, my problem was using the wrong longs as they were focused in China but I will switch the short term longs to the US. Last but not least, as we enter 2014, GDP growth is running at 4% and like I said last year as long as the economy continues to grow and we do not go into a recession, the path of least resistance is up.


I hope we find ourselves 30% Happier, Healthier and Wealthier next Dec 31st :) Happy New 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. 

Market Update

The market has continued its "correction" and it seems ready to challenge 1850 so we might see another bullish wave to a new high starting tomorrow right or on Thursday to celebrate the New Year. Whatever the case, I expect a real correction after the current wave from the 1768 is done. My guess is we might revisit the 50 DMA again on the next pullback, we'll just need some catalyst to bring back the bears.

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

Another day, another all time high. The question is when will this all stop and what kind of a correction the market will get when the Santa period is over. Unlike last year, the market is going into the new year in a prolonged rally and not a correction. So January might be the start of a stronger correction and perhaps the LT Int W4 I was looking for when the market topped at 1813 will finally show up. If the correction doesn't come in January but keeps rallying then bears might just have to wait until Spring for the real correction to start as that would mean people are just chasing returns and are afraid to miss out on gains. Which is a recipe for a big sell off, so the sooner  a healthy correction comes the better for the market.  At this point, the market is starting to get expensive and another 20% upside would officially place the market in bubble territory, specially without a good correction. One fundamental indicator I follow is the Market Cap to GDP and should the market go to 1.5 (On the chart) then that will be the time to short the market or go into bonds/cash. Perhaps we'll see the market match its previous peak in 2000 at the end of LT Int W5? At that point bears will finally be right but most won't have money to short.

I am keeping my short and long positions until I see profitable exits, which might come as soon as next week hopefully.

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. 

Relentless Rally

This final rally of the year is probably the strongest one I've seen since January as there are essentially no retraces at all, just a straight up rally as if taper news was the best thing that could have happened to the stock market. The Right Angled Descending Broadening formation target of 1850 has almost been met and I have little doubt the market will make it there before any significant correction. What I wonder is whatever happened to the W4, at this point I am not even sure it's coming at all. I am holding on to my VXX and my longs in the meantime.

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. 

 

Merry Christmas

The market did not top on a W3 as I was expecting but decided to continue to rally so we'll see if the market takes a break on Thursday. The daily MACD has gone positive so we might see bullishness carry into the new year before any significant correction.  On a different note I was finally able to enroll for healthcare last night so I can have a peaceful holiday.

Merry 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

I've spent a considerable amount of time trying to sign up for insurance today so I am not very happy with Obama right now. Unfortunately, I am one of those people who are a "small percentage" in the President's own words that had health insurance cancelled due to his stupid law and now I have to pay twice as much of what I was previously paying. But the main problem is I can't even sign up! I've been clicking on the submit button over and over since this morning to enroll and the website keeps timing out. And if I don't enroll by midnight then me and my family won't have insurance come Jan 1st and will have to wait until February. Ironic how "universal care" is making me and my family go uninsured. I don't understand why couldn't he just keep his promise on not messing with people's insurance.

Anyway, enough of my rant.. the market continued its bull run today and made another all time high that I think could be the top of the 3rd wave. So the market might correct and test the 1818 level before forming another base to rally from and go for 1850. The TA is not even in the 1800's and I doubt it will be tested until January but nonetheless I got a signal to buy VXX for the minor correction so we'll see how that goes.

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. 

 

Break Out

The market staged a break out of the Broadening Triangle and so far it looks like a stand alone W3, so the rally could continue early next week with a minor correction or no correction at all. We've seen several of these waves before and it's best to just ride them and avoid shorting them prematurely, specially since Christmas is next week. This move signals the 5th wave of LT W3 is extending and as I said previously, it will be hard to pin point where this will end. But it will eventually turn and I will be getting ready for it and hopefully we'll be able to call the trend change at that time. I know some of you have gotten caught off guard by the rally and I hope you will get a chance to re-adjust your positions. I obviously enjoy making counter trend calls as well as trading them but I am always extra cautious with these counter trend trades, so I urge the same for everyone else contemplating shorting at this time. Short term trading is like boxing, you need to have a good attack plan but an even better defense strategy, never get caught off guard.

Anyway, I am just riding the longs I have (which are not doing that well this past week since they are China related) but I am planning to start switching to ZIV (XIV's cousin) for short term long positions in the future and will develop a hedge strategy with VXX. So I will probably focus a lot of just volatility trading in the next few months.  I can't seem to stop trading these things for some reason..lol

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.