Monday, September 13, 2010

Elliott Wave Update

The market did exactly what I posted on the Elliott Wave Update on Friday and I ended selling my hedge today. I was able to improve my cost average of my main position to around 1090 so I'll hopefully make some profit at least on the pullback. I haven't missed a swing trade since July and I don't want to make this the first one. Today's price action basically completes all 5 waves of the count that I have and I expect at least a pullback to the 50 day MA currently at 1087 starting tomorrow or Wednesday at the most. I think the high will probably occur tomorrow (unless the high was in today) in the morning, so I am looking to short again intra-day on margin at 1127. Actually, the risk/reward favors staying overnight short on margin at this point with a stop at 1135. So if there is an early pop in the morning, it will be ideal to short more. If the pullback starts then it's fine with me, either way I am looking to make money out this set up.

Also, I should add that the rising wedge posted this morning is a reversal pattern with an average pullback of 50-55%. So whatever points the rally is, cut it in half and subtract from the high. If we go by that number, then we'll probably see high 1070s/low 1080s so the target matches the Fib retracement.

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