Break Out Tomorrow?

The market seemed like it was following a 5 count at the open but then it reversed completely to test the 1830 level again, which has held well so far as every single attempt to breach it has resulted in decent bounces. Normally, IHS break outs are in form of a W3 and the market left a 1-2 on the micro-count towards the end of the day but should this coming wave fail to fully break out of range tomorrow morning then support will probably not hold so well next time.  So everything comes down to the jobs reports tomorrow , what remains to be seen is how the news will be received. A strong report should result in a new all time high IMO but since now the idea of good news accelerating taper is floating around as a sell excuse, we could also see a bearish response (never mind the market rallied like crazy the day taper was announced..lol).  The bottom line to me is, if the economy generates the estimated number of new jobs then it's all good. So as tempted as I was earlier today to buy back VXX, I will wait for an even better price to buy back. Last but not least, the market closed again above a flat lining Trend Average so there will be a significant move very soon.

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 seems to have put in a flat correction today and now we have a good IHS pattern in place so the next most likely move will be a break out of the pattern on a W3. I am assuming the jobs report will be the excuse regardless of whether it is good or bad as now that taper has been announced these types of news can be used by the market to make significant moves. But obviously, there are no absolutes in the stock market so we'll see if the labels on the chart are correct tomorrow/Friday. I am hoping my longs will some traction tomorrow and hopefully I will be buying VXX in the 40s if the all time high gets taken out.


I forgot to add the TA on the chart but it is currently at 1837 but almost going flat.

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 recaptured the Trend Average and it looks like an bullish impulsive W1 is being formed. Once I see a 5 wave structure on that potential W1, I'll be able to make some projections which will without much doubt make a new all time high. As it is there is an Inverse Head and Shoulders targeting 1854. That bearish micro wave breaking out of the Triangle yesterday was indeed a non-impulsive wave despite making a lower low and I am glad I was able to catch it and sell the VXX I had, which sold off today. I just wished my longs were doing better but once I exit the position I will go with XIV and just use that as my short term long for the rest of the year.

Short Term Trend = Bullish 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. 

New all time high ahead?

The bears made an small advance today by breaking the Triangle to the downside and we should know in the next session or two if this is a W4 correction with a new all time high coming or if the market has made a significant top. One thing I noticed on the micro count was the micro W1 had overlapping W4>W1 waves, which technically nullifies the impulse wave. One can't really see it on the 30 minute chart I posted but that wave out of the triangle is not an impulse. Therefore, unless we see a big sell off tomorrow or the day after my guess is there is a good chance we'll see a bullish wave develop to challenge 1850 again. I closed my VXX position for a small loss but I am buying it back on the next bullish wave as the VIX went down despite the market's bearish day (not a good sign for bears). The key levels to watch will be 1813-1816 on the downside, if these levels hold then the bull case is alive and well. If not then down the market will go. The short term bullish trend is being challenged and we'll see if the market can recapture the TA before turning red.

Short Term Trend = Bullish 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. 

Triagle or Bullish Nested 1-2

The market took another stab at the low from Thursday but it ended being a higher low, which could be interpreted as a nested 1-2 set up targeting 1850. At the same time, one could make the argument for a consolidating triangle forming a base for another bearish wave so the short term direction is not very clear. The count however does favor this being some sort of consolidating wave before another high and the chart would have a better look if that was the case. But with Trend Average being challenged, I wouldn't bet on it. The key levels to watch are 1827.74 for support and the 1838.24 for resistance, whichever breaks first will likely point to where the next wave is going. I am holding on to my positions but will probably close one of them depending on where the market goes.

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. 

Correction

We finally had a "significant" correction after a 2 weeks of rallying and the market came down to test the Trend Average and closed on it but due to rounding I have it as 1832 on the chart. So I am going to assume this is a corrective W4 of a smaller degree with another high to come unless the Short Term trend turns negative, in which case I will assume there will be a correction that will go for the 50 DMA at the very least. Obviously, it would help (the correction that is) if we had some sort of bad news but so far there isn't much the market can use as an excuse to really sell off. Perhaps, we'll start seeing something bad in the next week or two? One troubling article I did see earlier today was on permabear Roubini turning bullish and if he is joined by the likes of Marc Faber and Doug Kass then we'll know the market is about to top! lol.. I forgot to write about it but the day the market found a bottom, Faber was on the news talking about how the market had topped at 1813 and so on. Bears getting airtime usually is a sign of a bottom.. works like clockwork.

The market will continue to decline from its November high of 1,813


I continue to hold both VXX and my longs. Still looking to pay off the rest of my front gate with Volatility.
 
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. 

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.