Thursday, May 2, 2013

Watching 1586

I was expecting a counter rally today in form of a B wave but this wave looks a little more bullish than usual and it closed right in the area where the short squeeze I talked about few days ago could happen. So while I still hope this is just a B wave of an expanded flat, the market could be putting in a W1. So I am watching the 1586 level carefully, which should coincide with the Trend Average tomorrow. If this level provides support, I expect 1614 on the bullish response. Ideally, I'd like to see a 1.618 C wave so we can have a proper Fib retracement and then see a rally from there since I'd like to see the market correct so we can have a clearer 5 wave structure for the Int W5.

I ended up buying VXX but did not stop out at yesterday's high as I had originally planned. I figure we should get at least a correction to 1586 before going through the 1597-1600 area, so I hope I am not miscalculating. And should the market sell off per the several bearish scenarios floating around then it's all good too. But I have to admit being hedged here (never mind being short) makes me somewhat uncomfortable as I don't want to get caught  in a short squeeze stampede.

Main S&P 500 Trends

Short Term Trend = Bullish
Medium Term Trend = Bullish
Long Term Trend = Bullish 

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