Tuesday, January 10, 2012

Correction coming

The fifth wave I had been waiting for finally materialized today and the market closed at the 1292 target I posted last week. So technically, the market has set itself up for a correction and in turn give us a glimpse of what the next few months will be like. Since this intermediate wave can turn out to be a C or a Wave 3, I no longer can predict the new few months until the market gives us a clue if this has been a correction all along or the beginning of an impulsive wave to high 1300's/1400's. Whatever the case, I see this C or W3 complete or close to completion and we will either text the TA or the 200 day ma next and then rally from there for a intermediate 5th leg or we sell off impulsively from here on. The key level to watch will be the 200 day ma and the Trend Average will keep you safe as long as you're paying attention.

I started to take profits today and hedged some long positions taken prior to the Santa Rally. And should the market rally some more (in a 5th of a 5th) then I'll unload the rest of the longs. Currently, trendlines and averages are pointing to a BULL market so it is dangerous to your portfolio to take up short positions until a confirmed trend change. I am planning to load up on longs again at the next bullish TA crossover (after the correction). But should the market get 40-50 points above the TA, I will initiate shorts but very carefully.

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