Tuesday, October 2, 2012

Is an Intermediate Bullish W3 coming?

The market managed to do another song and dance today without giving clear direction. And again there is another Head and Shoulders pattern targeting low 1420's and considering the 50 day MA is at 1415 and rising couple of points per day, I wouldn't be surprised if that is the level the market is targeting. Whatever it is, whenever I see a market trading sideways like this when both long and medium term trends are bullish it just means gains are getting consolidated. So I am expecting a rally sooner rather than later to challenge 1475 if the 50 day MA holds. What will be interesting is if we are going to get a supper bullish wave per the long term chart I posted, if we get a wave that is 100 points plus then it will make the long term count likely and perhaps we'll see the start of a multi-year bull run. Obviously, I don't like trading using these long term charts as there can be many outcomes but just a breakout of the ABC pattern would yield really good gains. And considering emerging markets are turning bullish now, I really wouldn't be all that surprised. I am buying a bunch of emerging market equities in the next couple of days and I am betting they will at least double. It might take months or a few years but I will be riding these to collect the generous yields (4% plus.. which is actually higher than the 3.4% mortgage rates on the 30 year fixed) and really take it easy when my target for them is reached.

Long Term Portfolio: 100% Long
Short Term Trading Strategy: Closed VXX @8.98 as of 10/01 at break even.

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