50 DMA Test

The market started to sell off as I had been expecting but I'd like to see the selling break the neckline of the H&S formation to verify the pattern and the waves. The SP500 bounced right off the 50 Day MA and it could maybe put in another shoulder for a "complex H&S" formation. However, the DJI which had been leading the market since April lows closed under the 50 DMA, which it hasn't done since early in last month. Also, the Nasdaq has never been able to recapture its 50 DMA ever since it first started to sell off, so it is likely the SP500 will do the same. May is coming to an end and the World Cup starts next month, so it is the perfect time for bears to come out of hybernation.

I am staying put on my short positions until I see a good level to take some profit/position trade.


For further analysis on RUT, NASDAQ, DJI, Gold, Silver and Oil please visit http://www.ewaveanalytics.com

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.

Stock Market Update - May 19

The market continued to rally today and we now have the right shoulder of the H&S at an ideal level. So if this pattern materializes, we should see the selling start in the next session or two. Obviously, there is a failure probability but I am hoping the market will be kind to me.. lol. The market closed above the Trend Average so the ST trend is being challenged but the market is right at the 1885-90 resistance and needs good bullish momentum to overcome this level.

For further analysis on RUT, NASDAQ, DJI, Gold, Silver and Oil please visit http://www.ewaveanalytics.com

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.

Stock Market Update - May 17

The market bounced today as expected and has formed a right shoulder of an Head and Shoulders that targets 1827. The bounce could go up to 1885-90 on Monday before another bearish wave that will break the 50 Day Moving Average for good. If the 50 DMA is lost decisively, chances are the market will visit the 200 DMA sometime in the next few weeks. The only thing that can change the bearish set up at this point is a rally to turn the trend back to positive and make another all time high which looks unlikely to me at this point. But obviously, I'll prepare for the unexpected as nothing is 100% in this game.

I am no longer long on my trading portfolio and for the first time in a long time I am short (I don't even remember the last time I was actually net short). My stop is set at 1905 so we'll see how that works out. I might mix things up a bit with shorts in the small caps but I have to take a good look at the RUT first this weekend. For further analysis on RUT, NASDAQ, DJI, Gold and Oil please visit http://www.ewaveanalytics.com

Have a great weekend!

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.

Possible Market Top

The market sold off today and eliminated the potential bullish count I had been tracking. Also, the level I mentioned yesterday was breached which now sets up the potential formation of a Head and Shoulders if we get a counter rally to test the Trend Average tomorrow (which has gone negative). If the market fails to recapture the TA, the next bearish leg will slice through the 50 Day MA which in turn will probably start a substantial correction.

I started selling the rest of my longs in my Short Term portfolio to raise cash and will add some shorts at the test of the TA with a stop at the all time high. You guys know I rarely call for tops but probabilities are no longer favoring the upside after today. The bulls would have to make a strong reversal day to change my mind.

For further analysis on RUT, NASDAQ, DJI, Gold and Brent Oil please visit http://www.ewaveanalytics.com

Last but not least, this is the only Technical Analyst I actually pay attention in the media and he apparently went bearish today as well:

http://www.cnbc.com/id/101677465


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.

Bullish Nested 1-2?

The market pulled back today enough today for a W2 so I removed the micro count labels to make it more simple. Technically, one could argue there were 5 waves completed yesterday at the 5 minute level so I am not going to worry about that too much right now. What we have to look out for is the possibility of a bullish nested 1-2 as all indicators are bullish and calling for higher highs. However, any further pullback must not breach 1867.02, if the market gets even close to that level and bounces from that level it will be forming a potential Head and Shoulders and possibly start the summer correction.

Today I had the chance to calculate trends and look for patterns on the RUT, NASDAQ, DJI, Gold and Brent Oil which I have never really tracked and a couple of them have interesting patterns. The ones that stand out for bullish opportunities are Gold and Oil while the RUT looks very bearish as well as the NASDAQ (to a lesser extent). I haven't been able to label possible counts but I have all the trends mapped out and I will probably shopping for an RUT ETF to load up when I find a lower risk/higher reward set up, specially if things get worse. Trends and further analysis on all these markets are on http://www.ewaveanalytics.com

I ended up position trading my hedge today and hopefully I'll be able to improve my cost average on it in the next few 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.

Summer Correction or Rally?

The SP500 finally reached an all time high and confirmed what I had been speculating since last month;

Thursday - April 10th

"The ideal target for the C wave is 1812 (which implies a correction and a resumption of the bullish trend)"

- The market bottomed at 1814

Friday - April 11th

"However, a counter rally that reaches 1872 will be setting up the market for the resumption of the bullish trend and consequently new all time highs."

But now that we have an all time high things can get interesting in the next few weeks. If we go by wave count alone, if 1859-89 was W1 then I expect 1935 more or less for the completion of this particular structure. At that point we could see the start of a summer correction, which we seem to get almost every year in May. Also, there will be a multi-month megaphone pattern which makes the correction almost too predictable. Now, the big IF question is what if the wave from 1737-1897 was a W1. If that is the case, we will not get a summer correction but rather a very strong summer rally where we see the market rally to 2130 before really taking a break. That might sound crazy to some but who would have guessed less than 2 years ago the market would be at 1900? remember back then the talk was about a bearish "Primary 3" to 300-400 that managed to ruin a good number of orthodox Elliott Wave followers who were short with all they had against the trend. So I won't be surprised if the market gets there as I expect the unexpected from this euphoric market. I welcome whatever the market decides to do as the Trend Average will keep us on the right side of the trade.

I am keeping my positions but position trading VXX if we get a TA test (would imply the micro count has topped). Tomorrow I will do the first wave analysis to the NASDAQ, RUT, DJI, Oil, Gold and Silver on the new site http://www.ewaveanalytics.com 

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 Highs

The market finally revealed itself today by launching a bullish W3 to all time highs, falling short by less than a point in the cash market but putting breaking the all time highs in after hours. The DJI also put in an all time high as well so this clears up the count a bit and confirms what I had been saying since the "perfect ABC" to 1812. The rally also shows just how much the market cares about Russia. So next time we see Russia in the headlines remember that it is just an excuse to sell and nothing more. With this said, this bullish 5 wave count might be it for a while. I've been expecting a W4 correction since Nov 2013 and there's a good chance we'll get it after the bulls go on vacation to enjoy their gains. I will be looking for the 200 DMA on that pullback, which btw I think will be healthy for the market so it can consolidate and rally even higher by the end of the year. I am keeping my hedge in the meantime while I hold to my longs. My goal is to sell these positions by the end of the 5 wave count to position trade or raise cash.

Also, I wanted to thank everyone who has wished me well and have given me feedback on the new site. To be clear, I am not planning to change anything in the way I blog or cut back on anything on this blog. What I am planning to do is to give market trend and wave analysis to the NASDAQ, RUT, DJI, Oil, Gold and Silver on the new site twice a week which again is http://www.ewaveanalytics.com I have never really done the calculations on those markets and in a way it will be better now because then I will be on top of all markets and identify important pivots that affect the overall market. Had I been following the NASDAQ for instance before the last correction started, I would have been able to get defensive earlier on the SP500.

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.