Thursday, December 30, 2010

Gap down or up?

I think the next session will be telling of what the market really wants to do. Prices did turn down today but stopped short of the level I am watching to confirm a bearish turn. This sort of price behavior usually points to higher prices, however there is also signs of a coming bearish structure in place so we'll probably get a strong gap down in the next couple of sessions or a gap up to break out of this trading range. The market is obviously overbought so probabilities favor a sell off sooner rather than later.

Wednesday, December 29, 2010

Possible Top at 1262 - December 29th

Picking tops is extremely difficult and usually I rely on EW and stock patterns to find the most probable topping patterns that indicate a top. Today there is the possibility that we have reached a short term top but it needs to be confirmed with consecutive closes under the 1253 level. We still have the Inverse Head and Shoulders target of 1269 but we have a rising wedge that broke (found usually on W5) in the last few minutes of trading and a clear bearish cross on the MACD. So tomorrow we'll see if we there is follow thru selling. I am maintaining both my short and long positions.

Tuesday, December 28, 2010

Inverse Head and Shoulders that targets 1269 - December 28th

Market is forming an Inverse Head and Shoulders pattern. However, if the market can't break thru the 1260 level, we should be watching the DBT pattern lower trendline. So far trading seems to be corrective with intentions of another push up fairly soon.

Monday, December 27, 2010

December 27th - Another Descending Broadening Triangle?

The market recovered easily from the early sell off today and the only pattern I see at the moment is another Descending Broadening Triangle. The markings are very similar to the one on 12/14 when I posted the last one so we might see another push perhaps to the 1270-1275 area. It's still too early too tell as the markings are not complete but if the market keeps avoiding key levels and trendlines then it is just correcting in my opinion. On the Elliott Wave labels, I've honestly lost count but every time we get into a triangle this theory points to a Wave 4 with higher highs to come. I think it would be more bearish of the market gapped up and then reversed as opposed to gapping down and reversing up. So I am staying with my short position until the test of the trendline again, if it bounces again then it means this rally is not done yet.

Thursday, December 23, 2010

Market Update - December 23rd

The market did not do much today but it did trade as if it intended to make another push higher. I could have covered my SDS position at break even but I think the rally is about done so I rather miss the upside than the potential downside. I am looking for topping patterns to develop so we'll have to see what Monday brings. We could possibly have an up day on Monday to form the head of an Head and Shoulders formation if the wave is in a W4 count. If this is not a W4 then we'll probably see a double top or triple top formation. We did get a short term reversal on the moving averages and that has potential to turn into a bigger reversal but for now I am still assuming higher prices as long as 1246 doesn't get closed under.

Wednesday, December 22, 2010

Market Update - December 22nd - S&P500 is about to top

The market kept going higher without a pullback and it basically reached my short term target of 1260. I think the market has enough room to go to 1275 if the coming correction stops at the rising trend currently at 1245. I re-shorted my original position (1212 then stopped at 1230) at 1256 and I will be watching how the correction turns out. If we get a big sell off that takes out that 1245 trend, then I would say the top is in and we're in for a correction of the entire rally from 1040. But if we bounce at that level (just like it did last week at 1232), then 1275 by December 31st. I intend to profit either way from this move, I am keeping my other long positions until any significant trend changes.

Tuesday, December 21, 2010

Market Update - December 21st - Descending Broadening Triangle almost complete

So we got the rally I was looking for this week and we hit the 1255 target. The inverse H&S projection was met today and the price behavior keeps looking very similar to the chart I posted on Descending Broadening Triangles last week (In fact, it is almost identical) and I am glad I was able to indentify the pattern in its early stages. The MACD has however crossed and it is signaling a pullback along with overbought RSI levels. So the rising trendline probably be tested again before going again for another high. That number is 1242 as of today and unless this number is broken and closed under consecutively, I will expect new highs.

I have not done any trades as I am primarily waiting to re-enter my short position. And I am keeping my FXI until I see a reasonable spot to sell.

Monday, December 20, 2010

Market Update - December 20th - 1250 finally..

I posted the 1250 target on November 30th and we finally reached that number today. The inverse H&S projection from August 31st has now been met but there are still couple of patterns that point to higher prices. I am not posting a chart today because there is nothing new on the patterns other than it is breaking out of the Descending Broadening Triangle as I predicted on Friday. And unless the pattern fails due to some North Korean missile, I think the market will continue to rally towards 1275. It might top before that but how tomorrow and Wed goes should give us an idea. I will be re-shorting this as soon as these patterns and waves are complete.

Friday, December 17, 2010

Market Update - December 17th

Market action points to a wave 4 with the possibility of a rally coming as soon as Monday or Tuesday to finish up the impulse waves from 1174. The market has respected the Descending Triangle Triangle Trendlines I drew several days ago and now it looks almost identical as the image below. Also, note the inverse Head and Shoulders formation targeting the 1255 area. I am assuming higher highs early next week and will use the opportunity to re-short the position I covered at 1230. I guess the 1250 target will be met after all.

Thursday, December 16, 2010

Market Update - December 16th

The market bounced at the level I mentioned yesterday and so far it looks like it was a test of the trendline. And now that the MACD has turned bullish, there is a chance for a lot more upside. We do however have the bearish candlestick confirmation from yesterday but one more positive close would turn the short term trend bullish again. As long as 1234 gets respected, I am expecting more upside to come.

Wednesday, December 15, 2010

Market Update - November 15th

We got a bearish confirmation of the candlestick today and the market is right above the level I watch which is at 1232 as of today. However, we have some indicators like the MACD and the RSI corrected enough and that can point to a sudden rally too. Also, we have the Descending Broadening Wedge so the picture is not all that clear. As a trader, I am focusing on the trend and consecutive closes below 1232 would point to a trend change. But until then, I am assuming the trend is just being tested so I am holding off on shorting until I see some confirmation. The Elliott Wave counts I have see are not all that clear either as some point to a W4 and others to the beginning of a sell off. What happens tomorrow and possibly Monday should give us a clear idea of where this is going. But going by seasonality, odds favor further upside.

Tuesday, December 14, 2010

Market Update - December 14th - Broadening Triangle formation

The market refused to pullback today and in the process the left the markings of what seems to be a Broadening Descending Triangle, which is generally considered bullish as prices consolidate before pushing higher. So I covered my shorts from yesterday at a small profit, keeping longs and waiting again for another push up to see if that will mark the top. I guess we'll see 1250 after all and if people get euphoric we might even see 1300 by January 1st. However, for now I am assuming the top is nearby.

Monday, December 13, 2010

Market Update - November 13th - Reversal Coming?

I think the market high today of 1246 satisfies the Ascending Triangle target as well as the Inverse Head and Shoulders projection I posted on August 31st. This coincides with what again seems like the end of a 5 wave move and a Shooting Star candlestick pattern. A negative close tomorrow would confirm the start of a bearish trend. However, I am looking for consecutive closes below the 1230 level to call 1246 the top for this leg and perhaps the entire rally from 1040. How the market corrects should give us a clue of where we are in the overall picture. There is a good possibility the market is ready to retrace the entire rally from 1040 and right now the 200 MA and 34 EMA look like good support levels.

I re-shorted today at 1245 and in the process improving my cost average by 15 points. So technically my cost on my latest SDS position is now 1227. I am keeping my FXI hedge just in case the market wants to go up some more.

Friday, December 10, 2010

Market Update - December 11th - Ascending Triangle Break Out

Market did break out of the triangle and I'm going to assume we'll be seeing 1250 soon. Despite being overbought and all the news the market doesn't feel like going down, so no point in fighting the trend. I cut my shorts yesterday but will re-add again possibly Monday or Tues, especially if we get a spike to 1250. I am staying long with FXI for a while so I'll technically be hedged if that level comes. The alternative of course is for the market to do a proper Fib retracement but it doesn't seem likely just yet.

Thursday, December 9, 2010

Market Update - December 9th - Ascending Triangle forming targets 1250

The market is not clear today since it failed to impulse to the downside. And unless it does so tomorrow, the price pattern looks like an Ascending Triangle with a 1250 target (which is the target for an Inverse H&S from 8/21). The bearish confirmation from couple of days ago was essentially reversed today so the trend is neutral leaning bullish. And while there is absolutely no doubt in my mind there will be a proper Fib correction of the wave from 1174 and the wave from 1040, the best option is to assume higher prices. So I pared down my shorts my 80% today since it seems the market might continue up and I am holding my longs. I will re-short again if the Ascending Triangle comes thru.

Wednesday, December 8, 2010

Market Update - December 8th

Today's move to 1219 had a 5 wave form and it's indicative of an A or a W1. The subsequent move to 1227 seemed to be corrective B wave or W2, how this upswing behaves tomorrow should give us a better idea tomorrow on how to label it. As of now, we had a confirmed bearish short term trend and this is an expected bounce. However, the cross on the MACD yet again to the bullish side can also imply another 10 point+ wave up and we should get the answer tomorrow. I am holding my hedged positions until a Fib retrace which will come sooner or later. On a side note, the cuts in payroll tax, 100% exemption of capital equipment purchases for business and extension of tax cuts is a positive for the economy. So there will be a bullish bias for the foreseeable future, as in the next few months.

Tuesday, December 7, 2010

Market Update - December 7th - 1235 Top for now

EOD Update: There was a bearish reversal today and I think we've finally entering the corrective phase. The market put in a Black Candlestick, a day after a Doji which translates into a bearish confirmation as far as the Candlestick method is concerned. I think we will see a test of the level posted on the right and tomorrow's 10 year bond auction might serve as a catalyst for a sell off. I am planning on going leveraged long at the first test of this level.

Morning Update: Interesting the market hit and seemed like it topped at 1235, which was just one point above the 1234, a Fib mark I had put down for last month. And now it seems like we are are starting an ABC move, note how the MACD has reversed. It's rare to see the MACD in the 30 min frame reverse the same day.

Monday, December 6, 2010

Market Update - December 6th - Double Top ?

I am still waiting for a retracement to test the rising trendline currently at 1201 (goes up a few points everyday), I see 5 waves completed so the only upside left would an extended 5th wave. There seems to be a lot of resistance at the 1227 in the cash market and it might well put in a double top for this leg at this level. However, it might be just buying sometime to do yet another trust to pull in buyers. I favor a pullback this week so we'll see. I am hedged in my positions and will use the the correction to the rising trendline to go long on margin. I was reading today that Goldman Sachs is forecasting 1450 for 2011 and that is one company I pay attention to. They forecasted 1275 for 2010 and I think might just be on the money by Dec 31st.

Sunday, December 5, 2010

More QE? Bernanke Interview

Seems to me like Bernanke is ready to print more money which equals higher equity prices/asset prices.

Friday, December 3, 2010

Market Update - December 3rd - Another high coming soon

The market refused to go down today despite the obviously bad news on job creation. And prior to the announcement the EMinis had made a high for the year, so I think a higher high for the year is now a given. The fact the market refused to dive and traded sideways was an indicator of lack of sellers and enough buyers who believe we are going higher. I am holding short but I went hedged this morning at 1219, I was actually able to pick up my FXI at a cheaper price than when I sold them at 1205 so it works out in the end. The bearish MACD cross, the overbought RSI and this morning my confirmation for entering shorts all failed. So it goes to show this rally is just barely getting started. With that said, we should get a pullback to the 1200-1210 area before going higher. Perhaps Monday will be the "delayed" sell off, either way I'll be able to sleep ok this weekend.

Thursday, December 2, 2010

Market Update - December 2nd - Correction to 1200?

So the market went much higher today and it is obviously gunning for 1227 to make it clear to those sitting on the fence we're going for a year end rally. And again, looking at the last time a break out happened, we had 3 huge straight up days before any meaningful pullback. Whether this will be the case this time remains to be seen. On the EW side, I see 5 waves completed and the technicals are all oversold plus we have a bearish MACD cross on the 30 min (which is the one I like to follow). However, there is one indicator I use (trendlines and different averages) that did not confirm so we might see even more upside tomorrow. Perhaps even one that will blast thru 1227 if the job reports comes in incredibly well or really bad (more QE). Ideally, I'd like to see a correction to the 1200-1210 area and then resume the march to 1250.

I made a mistake today in going short at 1212 and if I get caught off guard by a gap up it will be due to my own impulses and not because of my trading system. I've been honing my analysis over the last year and I'm getting better at shorting which is a highly risky strategy. So I am praying we get a retrace tomorrow to test the level I watch which is around 1198 as of today.

Wednesday, December 1, 2010

Market Update - December 1st - Breakout points to another rally to 1227

So the market today broke out of the pattern as I was speculating yesterday we would do and the strong up day confirms a Triple Bottom Reversal. In looking at the chart I posted last night, you can see the similarities. The last time we had a strong up day like today was September 1st, which was the break out from the triple bottom then. And I expect the market to continue upwards in the next few days. I sold my longs at a nice profit at the close and shorted and closed right away. I almost kept my longs overnight but I figure I rather lose a trading opportunity than actual profit. If the market tests the rising trendline or does a Fib retrace I will get back my long position. Right now, I see 5 waves completed of a W3. So tomorrow we could trade sideways and then continue upwards or a retrace and then up. The retracement or sideways move could also happen overnight so we might wake up to a gap up as well.

Market Update - November 30th - Triple Bottom or Descending Triangle?

The market tested the low yet again but the market will break out of this range very soon. Basically, this could turn out to be a Triple Bottom or a Descending Triangle. I am personally leaning towards the Triple Bottom scenario and trading as such. My stop is simple, I will get out of longs if 1172 is breached. At this point there should be a 5th wave left in the rally from 1040 that should take us to 1250 but first 1190. We'll soon have the answer.

Monday, November 29, 2010

Market Update - November 29th

The market broke the inverse H&S pattern I was speculating on last week but the drive to the low did not break 1172 so the market seems to be stuck in a trading range. This type of sideway movements usually are found in the 4th wave of Elliott Wave counts. And the fact that the market is holding up without the 28 Fib retracement from the rally from 1040, leads me to think there is further upside coming. This is looking more like a correction at this point and it also seems to be forming a broadening wedge, which is a bullish sign. So we'll see how much longer the market goes in this range, as long as 1172 holds we might get a Christmas rally after all. if it doesn't then it's time to stay short. I am currently holding my FXI from last week and ahead by a few points.

Friday, November 26, 2010

Market Update - November 26th - Potential Head and Shoulders Targets 1219

Again the market made a high in the 1200's after hours but not in the cash market. And the market rebounded at the level I was speculating to form a right shoulder for yet another inverse Head and Shoulders. It's still early in the day so we'll see if another low is made. Also, there is the potential for an Ascending Triangle as well if the rising trendline gets respected. As an EW pattern, the low today would be a W2 on a C or W3 of a W5 (as long as 1176 does not break)

Wednesday, November 24, 2010

Market Update - November 24th - More upside and then 1180's?

The close today not only tested the 1190-95 area but broke thru the bearish trendline, which turns the short term trend bullish. Give then fact that we're entering the holidays, I lean towards more upside with today's solid close. And if the next session brings us further upside then I will attempt a short again and go long at the level I watch. I sold my longs today at 1191 and shorted prematurely and violated one of my rules by holding on a bit too long. So I stopped it at 1196 and I am 100% cash right now.

Happy Thanksgiving!

Descending Triangle Pattern?

While not a perfect Descending Triangle Pattern. I think the price action justifies the assumption of this possibility. If this is right, the target in the S&P would be around 1130. I sold all my longs at 1191 and went short, I am assuming the market will respect the descending bearish trendline. If the market breaks above it, then it will invalidate this pattern.

Tuesday, November 23, 2010

Market Update - November 23rd - Bounce to the 1190 area tomorrow?

For all the commotion on the Korean issue and Ireland, the market completed a C wave that measures 1.38 of A. In other words, it looks more like normal correction than a sell off since the market did not even close the gap from 1172. However, the market is flashing bearish signals by refusing to close over the level I watch which was 1193 today. For the market to go into bullish mode again, it would have to close over the bearish trendline and not make a low below last week's 1172.

I closed my shorts today at 1185 and went long FXI at the 1181 level. And admittedly, the Korean situation does make me somewhat uneasy staying long overnight as I am familiar with the Korean conflict. I was in Seoul couple of years ago and toured the DMZ area and these countries are ready for war at a minute's notice. Technically speaking they are still at war and considering Kim Jon-Il is a little nuts I wouldn't be surprised to see some bizarre North Korean event.

Market Update - November 23rd

Morning Update:

- Mini inverse Head and Shoulders targets 1191

- I think a market found a bottom (at least temporarily) at 1180 but might go for the gap below and test 1172. I covered my shorts at 1185 and went long with FXI at the 1181 level to play the retrace/test of the level at 1193. If Kim J Ill decides to go crazy then expect S&P 900's!

Monday, November 22, 2010

Market Update - November 22nd

EOD Update: The end of the day was bullish and I am assuming this is the B wave of an ABC move, however it could also be a W1 in play and looking for only a Fib retrace as opposed to a C move that would take us down to 1184 again. How the market behaves tomorrow will give us a clue. The market did end up in the 1205 area overnight but plunged by the time the cash markets opened. I was hoping I would have caught that high in the cash market to sell my longs and go short but instead I ended up selling my FXI at 44.38 for a 0.5% gain at the 1195 level and went short at 1196 and 1197. I am will start covering shorts at the Fib retrace unless it is a swift plunge like the one we saw today. But the bottom line is that it seems like we're heading up this week.

Morning Update: This could be W1 of a W3 or a C. The market did top in the e-minis last night in the 1205 area in a 5 wave move from 1173 and technically we saw the correction this morning and now we're on to the next wave. For the bull case, the S&P should close over 1197 but if it bounces off that level then we can probably expect further downside. I just sold my longs from 1190 and went short at 1196 for an intraday trade.

Friday, November 19, 2010

Market Update - November 19th

EOD Update: The market bounced off the 1190 level and managed to close over the trendline at 1199, which now confirms a short term bullish uptrend. Looking at the waves, today's "reversal" is part of a W5. We will have a Fib correction for this 5 Waves up and then we'll get another 5 Waves up. The question is if this is a W1 of W5 to 1250 or part of a C wave, which implies a corrective wave. Whatever it is, the trends I analyze have worked wonders so I'll be ready when the time comes. I ended up covering my shorts at 1190 and going long using FXI and will start hedging this position in the 1205 area (where I expect this last sub-minuette wave to top).

Morning Update: If the 1190 level holds, it could potentially set up the right shoulder of an inverted H&S targeting 1235. Given the fact the inverted H&S from 8/31 targets 1250, I wouldn't be surprised if this is the leg that will take the market there. Trend is still down, so first the market needs a close over 1198 to change that. Until then I am assuming lower prices.

Thursday, November 18, 2010

Market Update November 18th

The market retraced to the 1190+ area as I was hoping and I ended up selling my longs from 1187 and going short at 1194. However, today's impulsive wave needs to be reversed hard tomorrow or else it will mean there is still another wave left to the 1205 area. So I will be setting up my stops at break even at the 38% retrace. The market is no longer in a 5 wave count so it now opens up to other possibilities, what they are is anyone's guess but I will be watching the level (currently at 1202) and see how the market deals with it. The market is in a downtrend so it usually bounces off from this trendline but if it manages consecutive closes above it then the short term trend will change to positive. Until then, I am assuming a bearish trend and trading along with it.

Wednesday, November 17, 2010

Market Update November 17th

Markets turned today but it seems to me like there is still a "c" leg up to test the bearish trendline from the descending triangle. Given the fact that the GM IPO is tomorrow and euro bounce, I think it favors a leg up to the 1190-1195 area. I remain long overnight and will sell and short if I am right on this "c" leg.

Tuesday, November 16, 2010

Market Update November 16th

Prices did trend down as expected and it reached the Descending Triangle Pattern target of 1183 from last week and some more. I went long at 1187 expecting a bounce that never materialized. However, I think we'll see a W4 bounce or another wave that will test the descending line from the DT to relieve the oversold condition and then continue downward. If the EW count is correct, this wave would bottom around 1155-1165. However, lower prices are very possible as long as the market does not go back to the trending level I watch which is at 1209 right now.

Monday, November 15, 2010

Market Update November 15th

The market ended up retracing today and then reversing down. However, it retraced into what I considered W1 territory, so I removed those labels until the count becomes more clear. The market respected the downtrend from the Descending Triangle and I shorted around that area and took profit towards the end of the day. The market is going down and the level to watch is 1210 as of today, until this level is breached we can assume lower prices to come. So I will probably go overnight short at the next test of the trendline. Most EW counters are calling this a corrective Wave 4with a bottom around the 1170-1180 area and it looks like it so far. As long as the we don't retrace all the way back to the 1150 level, I am inclined to think the market is just digesting gains before an end of the year bull run.

Friday, November 12, 2010

Market Update November 12th

The short term trend finally changed so now I can officially call the 1227 a significant top. And it happened on the 10th week as I had been speculating for weeks, usually waves have time and length relationships and this one is almost a carbon copy of the February-April wave as seen on this post. With that said, we still don't know if we are having a "mild" correction on a Wave 4 before turning up and finally topping again in the 1230-1250 area and then going into a corrective Wave 2. In my opinion, how this bearish wave behaves should give us a clue. If it doesn't retrace at least 38% of the entire rally from 1041 then I will assume it is a Wave 4. But if it goes down to the 1150 area then I will label it a Wave 2, with an expectation of a massive Wave 3 that will take us to 1300.

I was cautious yesterday and did not take overnight positions. And unfortunately, I got stopped out at break even during a 5 second spike when I shorted at 1209 this morning before plummeting. I was however able to make some money going long at the end of W3 but for being right, I didn't make much money. Lesson learned, set a 2 point stop as opposed to my stingy 1 point stops. My stops have saved me a lot of money but I think it has cost me more in opportunity costs in the end.. trade and learn! I am cash over the weekend and will be taking short or long positions on Monday.

Thursday, November 11, 2010

Market Update November 11th

There seems to be some indecision by the markets but I think we'll have an answer very soon. I have been expecting prices to go up to the high 1220's/1230 level but the dollar strength hasn't helped and neither has earnings. So perhaps the top is in for this rally, the 10th week as I had been saying for weeks? There is a Descending Triangle targeting 1183 and there is an Ascending Triangle targeting 1217 so the market is not very clear. I almost stayed short overnight but didn't do it because we are still above the bullish trendline and there was a cross on the MACD, if we go below than level tomorrow I will stay short and especially if the 1204 support breaks. In the meantime, I will continue to assume this is a W4 and that we are still going up since the market keeps bouncing off the levels I've been posting.

Wednesday, November 10, 2010

Market Update November 10th

I haven't changed the chart at all and the market just followed the levels and the blue lines I marked. The market bottomed at the 1204 level mentioned yesterday and bounced off over 1% to close at 1218. I now expect a 38-50% retrace of that wave to set itself self up to go into the 1220's area in a W3 of this last W5. I assume the market will sell on the Cisco earnings but will regain its footing. However, if the market can't shake those news then I'm looking at 1206 as the level to watch. Any closes below it will change the trend from bullish to bearish.

Tuesday, November 9, 2010

Market Update November 9th

The market ended up going down as I was expecting and I am seeing this as a correction or W4. Traditional technical indicators confirm a downtrend with this close but given the fact that we ended up over 1204 and the trend is still pointing up, I am assuming there will be a 5th wave that will take us to high 1220s/low 1230s and not the real correction many shorts have been looking for. It would be interesting to see the market top at 1234, which is a number I posted several weeks ago. But all looks like a 50/50 now, Elliott Wave vs Technical Analysis.

I went hedged today per my plan yesterday. So hopefully we'll see that one more rally and then a sell off.

Monday, November 8, 2010

Market Update November 8th

This is the 10th week of the rally and I've been saying for about a month that this could be the week where we top. But that is just speculation on my part, I am inclined to think the market likes to repeat itself in time and prices so it will be interesting to see this actually happen. We are still above the bullish trend and any pullbacks that stay above "the level" should be considered an opportunity to go long or cover shorts to improve avg cost. Today's negative close showed there was indecision in the market and given the fact the dollar has dropped to levels where the market was at 1180, there is a possibility of a pullback starting in the next couple of days. However, I can't ignore the charts and they are pointing to either a W4 triangle that will land us in the 1230+ territory or an ABC with a sell off about to start. Either way, I am expecting a pullback tomorrow morning and since I am holding overnight shorts, I will cover only if we do not close under the level on the next intraday pullback. I was perhaps premature in shorting at 1213 but it is still a safe level considering all other factors.

Friday, November 5, 2010

Market Update November 5th

The market reached the bull flag target and at 1227, I suppose the market has gotten close enough for the 1234 target I posted weeks ago. Next week will be the 10th week and I am speculating the top is in already or next week. Of course, this could be the end of a W3 and go down to the 1200 area before going to 1250. But seeing how much the dollar gained today (basically it gained what it lost the day of the rally), the conditions are in for a reversal. That and the fact that the market is overbought and all the news that investors had been waiting for are all out.

I am leveraged short and covering at the 1200 area if we get there in a corrective manner. But I will not cover if we breach the level posted.. we'll see.

Thursday, November 4, 2010

Market Update November 4th

I was expecting the market to gap up in a W3 Ascending Triangle break out and it did so in full force. All the technical pattern targets I had been posting for days were reached today. I think it's funny how 1196 held for weeks and next thing you know we have a 20+ point close above that. Anyway, I see the 5 wave pattern done or close to being done before going into a correction to the 1200 area and then another launch higher to the 1234-1250 area in a W5 (If there is a 5th wave left). The market is now equal in length to the Feb-April wave and the only difference is that we are at 9 weeks vs 10 weeks on that rally. So once we have time and price satisfied, we should see a turn. But as I tell myself everyday, as long as that number I put up on the right hand side of this blog does not get closed under the trend is UP.

I went short at 1213 today without stops and I am holding overnight short positions.

Time and Price Relation

Now that we are testing 1219, I think we are close to the top of the rally from 1041. I posted about a month ago that there were similarities in the Feb-April wave in time and price and that there was more upside to come. And now that the price element has been reached, we have the time element left. It's hard to call a top when the trend is clearly up but my guess is that we will find a top between here and 1235.

Feb-April rally was 175 points and 10 weeks in duration. The current rally is 177 point and 9 weeks in duration.

Wednesday, November 3, 2010

Market Update November 3rd

As confusing as the market appeared to be today, all the action took place inside the trendlines drawn days ago. The market tested the lower trendline and stopped on it as if everybody watching that line. And now that 1196 finally broke, it seems like the market will make an move to break out of the triangle tomorrow. It could well test that lower trendline again but based on the EW count, it favors a gap up. The level to watch was visited just briefly, a few seconds if that and it worked great as a spot to go long.

I broke my own trading rules today by going with "hunches" and reading the news too much. So I ended up losing on 2 day trades but I am all cash again and learning from my mistake. Short only at extremes in an uptrend, long only at test of trendlines and oversold extremes if the market is above the level I watch. Had I followed my own advice, I would have had a very good day.

Tuesday, November 2, 2010

Market Update November 2nd

The market finally closed over 1185 and we now have technical patterns that point to higher prices. We have a larger Ascending Triangle with a 1220 target, an Inverse Head and Shoulders projecting 1204 and today a bull flag pointing 1201. That's in addition to the gap from April 1197-1202. So I am in cash and waiting for a good spike to short and unless these targets are met or the trend changes and closes under the level I watch, I will stay in cash and only trade extremes. It'd be great to see a big spike to the 1220 area as I think that is where the rally ends.

Monday, November 1, 2010

Market Update November 1st

So the market gapped up to the area I was projecting but then it reversed deeper than I had expected. In the process, the market formed a potential Ascending Triangle that targets the 1220 level on the S&P. The Elliott Wave count is technically still valid but we would have to see a huge rally tomorrow to confirm.

I entered the market short in the morning at the gap but a bit too early so ended being stopped out at break even. I also too another long position that got stopped out at break even and during the last minutes I got stopped out of a third position at a -0.3 loss. So I am hoping to have a better day tomorrow. My goal is to have a 2 to 1 positive to negative day trades so we'll see how this week goes. I will be again shorting at gaps and going long at support levels. In the meantime, I am staying 100% cash.

Friday, October 29, 2010

Market Update October 29th

The market did not do much today. I was expecting the GDP report to cause a strong move but it basically triangulated all day. On the bullish side, the market respected the level I watch for trend change and there are couple of technical set ups that point higher. First, we have a smaller inverse Head and Shoulders set up that points to 1204 and an small Ascending Triangle targeting 1190. In addition, the market did not test yesterday's low at all so it points to a bullish bias. The one negative I see is that the MACD started to roll over on the 30 minute time frame so we should see a strong move either way early next week. My Elliott Wave count remains the same and it will be validated if we get the trust up or negated if the 1172 low is taken out.

I traded short for a brief moment today but I got stopped at break even. So for the week, I had 4 successful day trades, 2 break evens and 0 loss trades with a return of +3% of the total portfolio. I will be holding cash overnight in the meantime until I see a set up I feel comfortable with.

Thursday, October 28, 2010

Market Update - October 28th

The market gapped up as I was hoping and I shorted as planned. The market respected the 1180-81 level and I went long in the last hour to take advantage of the obvious. So it was a fruitful day for me and I am all cash again. Since the trend is up and the wave structure seems to point to yet another gap tomorrow, I will probably short again depending on how strong it is. On the chart, I see a potential for a W3 so if it's something over 1%, I'll short it but very carefully as W4 sometimes do not correct much in strong gaps.

I think 1200 might be challenged tomorrow.. we'll see.

Wednesday, October 27, 2010

Elliott Wave Update - October 27th

Today's market action invalidated my count yesterday but indexes closed towards the upper range of the day and above 1179 so the uptrend is still intact. I used today's initial gap down to go long and booked some profit at the Fib 38 retrace. I also shorted at 1179 in the final hour but got stopped at break even and now I am all cash again. I've see some Triangulating counts and Ending Diagonal bullish counts that call for a new high soon. My own prediction is that we will get to 1207 if we don't see any closes under 1180 (the level changes everyday). So tomorrow I will short at a a bullish gap or long at a bearish gap for intraday trades.

Tuesday, October 26, 2010

Elliott Wave Update - October 26th

The market continues to trend up and it set itself up for possibly new highs in the next couple of days. The dollar strength has done much to stop the rally so I think the real catalyst is the QE announcement in November. Until then, traders are positioning themselves for the implications for more money in the system. I am continue to watch the level for support, until the market closes under it, I will go long (like I did today) at this number or short on bullish gaps. This strategy has worked very well and I get much better sleep.. but as soon as the trend turns south, I will hold leveraged shorts overnight.

Morning Post: Market bounced off the level I was watching. I traded long and now there is an inverse Head and Shoulders that targets 1210.