Thursday, September 20, 2012

Bearish W2 or new high?

The market gapped down this morning to 1449, which was close to the level I was looking for on a correction. However, the market recovered right away and this is one of those scenarios I find hard to predict. Looking at the pattern, the wave this morning was clearly bearish impulsive and the bounce could well be a W2 counter rally, which would lead to a very bearish wave next. However, I see a bullish cross on the MACD and a comfortable close over the trend average so this could be a wave that will challenge the 1475 high after a correcting for 5 sessions. And as I've said before, whenever we see these mild corrections that correct mostly in time, it gives the market time to consolidate and launch a strong bullish wave. So no idea what tomorrow will bring.. I am maintaining my hedge mainly because the 38.2% Fibonnaci retracement for the wave was not hit at 1444 but I have to admit I'm not too comfortable holding the hedge

so we shall see what tomorrow brings.

Long Term Portfolio: 100% Long
Short Term Trading Strategy: Hedged with VXX @8.98 as of 09/13

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