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.

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