Market Update

The market continued to rally as I had been expecting and managed to close over the Trend Average and what remains to be seen now is whether it will reverse to put in a lower low or go for another all time high. Given the timing, I lean towards more upside but I am not betting on it until the TA turns bullish again. I ended up selling my XIV (+26/-6) for a profit as planned and now I am on the sidelines to see how the market behaves at the 1874-84 level.

The short term trend will turn bullish again if the market closes above the TA again tomorrow.

Short Term Trend = Bearish 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.

Market Update

The market was not done going down yesterday but with today's leg testing the 50 Day Moving Average (the first test in 2 months) we should see the bounce I posted about yesterday materialize. The difference is now the potential micro W1 is longer so a bounce could challenge the 1880 area again. With earnings season in play, this is the bulls chance to recapture yesterday's lost Trend Avg. Also, we have to keep in mind that this recent sell off came from a no news environment. So things could turn around if companies manage to surprise to the upside, specially high tech.

I continue to hold to my XIV as there might be a gap up tomorrow or a substantially counter rally. Once those waves are in, I will get back into VXX but it will depend on where the market trades relative to the TA.

Short Term Trend = Bearish
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.

Short Term Trend Confirmed Bearish

The correction on Friday was expected after having a 5 wave move completed that day. However, the lower low made today wiping out all gains from that 5 wave count came as a surprise to me as bulls had the momentum after all the seemingly negative news had failed to produce even a 50 DMA test. But today's low changes the Short Term Trend to bearish and unless the market rallies hard above the Trend Average, my guess is that the Intermediate Trend will change as well. The market could still put in a new high and form a Megaphone top or it could just rally to the TA or the 1874-83 area and then reverse to put in lower lows. Looking at the micro count, if 1841-52 was W1 then I am expecting 1870 as the target and a good spot to start hedging.

I didn't get a chance to position trade the XIV I have since I didn't catch the first support level that broke. But since it didn't really go down all that much either I think I can still make a profit on it on a test of the Trend Average so maybe we'll see the TA tomorrow. Whether the market can recapture it is another question. I will probably start loading up on VXX at resistance to hedge my long positions, which actually have been rallying.

Short Term Trend = Bearish
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 fell couple of points short of the measured target for the SP500 I had but nonetheless it made an all time high again and now there is a complete 5 wave structure from the 1842 correction low. I normally expect a Trend Average test after 5 waves are completed but the move today to the TA was swift. However, it seems like this particular leg found a bottom at 1863. The ideal correction for a W2 is usually a Zig Zag but obviously anything can happen. So we could either see 1884 challenged before the bearish C leg or the rally could simply resume after today's sell off. I am keeping an eye on how the market closes relative to the TA as the trend needs to be bullish for higher highs to materialize. As it stands, the bullish short term trend is being challenged.

I executed my plan to buy back the VXX I sold yesterday near the high and closed the position profitably at the test of the TA (24/29). I also day traded the pharma stock I sold the other day (25/29) and I bought XIV which I am holding over the weekend. Hopefully, we'll get a strong bounce on Monday to 1884 so I can sell some or all of XIV. However, if today's support is broken on Monday I will probably position trade it/hedge it as 1852-55 would likely be tested.

Have a great weekend!

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.

1900 tomorrow?

The market corrected as expected on what seems to be the micro W4 on the chart and if the reversal that followed is the W5 then we're looking at 1906 as soon as tomorrow. I added the length of W1 to today's low to come up with the target which is in the original range I had talked about when resistance broke. So I assume whatever news we get tomorrow is going to be used as an excuse to rally.

My VXX position did not go into positive even with today's correction but I sold it as a position trade. So I will be buying it back in the 1900's or in the 39's hopefully..

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.

1900 Challenge

Another day, another all time high. I won't be surprised if we see several highs this month now that the market is clearing resistance. I relabeled the charts to reflect the end of micro W3 today but I think the market will not correct significantly until 1900 is reached, specially it's so close to that number. And once we see 1900, why not make it a nice round number like 2000! I know some people feel the market is generally overbought (myself included) but the trend is clear at the moment and there's no point in fighting it. I won't be surprised if we see 2000 before the usual summer correction, which btw should provide an opportunity to go long for those that have been waiting on the sidelines and missing out all the upside in the last few years or worst yet shorting a market that has essentially tripled since its 2009 low.

I am still holding VXX and will take profit whenever the market allows for it. If we get a W4 correction it should allow me to get out with some money for my daily coffee :)

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 High

The market followed the count I had on the chart yesterday and it seems like it is finally going to break out of range. Going by wave proportion and my usual rough estimates with W1, a 5 count should take the market to 1900-05 which should happen just with with short covering alone if resistance breaks convincingly. The Trend Average has now turned bullish again and as I mentioned before we could see a big rally from here given then fact the market has corrected enough for another multi-week rally that could easily add another 100 points before taking another break. 

I ended up buying some VXX to hedge longs but I might position trade them depending on how the waves evolve 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.