Friday, July 26, 2013

Market Update

The market put in another lower low today before putting in a bullish reversal and I adjusted the wave count to reflect this move. I overlooked the fact that 5 waves yesterday to the 1680 low were part of the W3 and not the entire count so now that we have the new labels we can speculate on what's coming next. Basically, I see the bearish potential in that there is an Head and Shoulders targeting 1655 and the rounded top trendline (technically speaking the rounded top already took place when the correction started earlier this week), which would imply the correction is a W2 of LT Int 5 of LT W3. At the same time, the market has kept up with the Trend Average by re-capturing it and closing above it and leaving the potential for an Inverted Head and Shoulders at the test of 1680-82 (assuming we see a retrace of today's wave on Monday or Tuesday). Which implies W4 of W1 of LT Int 5 is done and we are in the early stages of W5 of W1 of LT Int 5 and if this is the case and the first wave topped today at 1691, I project a target area of about 1715 for this final wave of W1 of LT In W5.

My VXX position is performing poorly despite the market correcting but I will position traded it hopefully at the test of 1680-82. I am also planning to add longs at 80-82 in case we are getting an IHS with a stop at 76. Last but not least, thank you for voting on the sentiment poll (Trending Waves Sentiment Poll). Once the week is over, I will add a recap of the wave to the post and this way we can compare what sentiment is like during each particular wave. I think this poll is more valuable than the usual sentiment polls in the sense that most people voting have TA and EW knowledge so we'll see how this evolves during the next few months. Maybe certain waves will have particular sentiment characteristics?

Have a Great Weekend!

Main S&P 500 Trends*

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

* Trends are not trade signals. Trends are posted for situational awareness only and does not take into account wave counts, technical or fundamental conditions of the market. While mechanically trading the posted trends is feasible, keep in mind that these are lagging indicators and as such are prone to whipsaws and I personally do not use nor recommend them to initiate or close positions in the market without taking into consideration other factors.

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