Market Update

The ABC wave was confirmed today and we have a potential set up for more downside, potentially targeting 1600 if the bearish wave today was a W1 . But as I said yesterday, the market has to deal with the 1620-26 area first and I suppose what we get next week will depend on what decision the Obama administration takes on Syria. Which so far looks like a limited strike after the UN inspectors leave and possibly after labor day. Personally, I feel the administration should get congressional approval to do this as our representatives should have a say in this since citizens can't do a referendum. But I guess it's just wishful thinking as the executive branch does pretty much whatever it wants now days. I just hope this doesn't come back to hunt us in the future. I can't think of anything positive that has come out from US intervention in the Middle East since the 80's.

Anyway, no trades today as I prefer to see the market's reaction after a decision is made. I believe wave analysis and TA can gives traders an advantage during normal market conditions. But trying to predict siginificant future events with these tools are no better than a coin toss. 

Have a great and safe holiday weekend!

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = Bearish

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.

Corrective bounce

The market rallied somewhat early morning following the 2 possible counts from yesterday and the reversal later in the day implies an ABC pattern, so the micro 5 wave count is off. However, there is a possible bullish nested 1-2 but I think it's best to be cautious here as two of the trends are in red. Should the market put in another bearish leg the number to watch is 1626, also the base where the rally started last month was 1620-25 so that level might offer a good opportunity to go long if it holds. I ended up selling Google for a profit in case we had an ABC in the morning, which is what ended up happening. So I will be buying back Google at support or shorting through VXX at the test of the resistance near the 50 day ma. But for now, I am cash on my short term portfolio.

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = Bearish

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.

New 5 wave count or ABC

The market bounced as expected and alleviated yesterday's oversold condition and I see on the micro-count a potential for a new 5 wave count targeting the  50 day ma. But obviously if the bearish wave is not done then we could just get an ABC move and the see the 1626 level tested. Also, since it's been now almost a month since the 1709 top was put in, I am inclined to label this wave a W2 and for a better perspective I posted a longer term chart today. Notice how the RSI and the MACD are already at similar levels as when the market found a bottom at 1560. This doesn't mean the market will start rallying right away but the base to launch a similar rally (1560-1709) is in place. Perhaps the Syria situation will be the catalyst of the market's next big move and it looks like Obama is taking a page from Dubya's book and will launch an unilateral attack.. not a smart move if you ask me. In times like this, Ron Paul makes a lot of sense.

I didn't trade today as I am waiting for Google to reach $900! lol.

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = Bearish

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.

Intermediate Trend is confirmed bearish

I was expecting the market to go down yesterday and down it went. Now that we have this wave, the count looks better with the recent 5 waves that were finished as part of a W3 with the high yesterday as W4 and now W5 which should be ending soon. Also, the Intermediate Trend is now solid red so we have both the short term and intermediate in red which warrants even more caution in rallies that fall short of recapturing these key trends. The key 1626 level I mentioned last week has yet to be breached despite the sell off so we'll see if that level will hold further bearish advances. Now, on the reasons we're selling off which are primarily Syria and the debt ceiling. I think these are just good excuses to correct, we've seen many of these types of of events in the last few years which usually end up being non-events as far as the stock market goes. Personally, I hope they let the UN do something and not the US acting alone again! the human tragedy over there must be accounted for but last time I checked I thought the main purpose of the military was to protect the homeland not policing the world.

I missed the first sell off last week by selling VXX a day too soon but this time was different. So I sold VXX around 1635 and went long Google again for a much better price than I sold last week. I will add more longs if we get to the 1626 level, if not then looking to sell on a test of the 50 dma or 1670.

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = Bearish

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.

Intermediate Trend being challenged

The market had a reversal day today for what seems like part of a zig zag or perhaps a bearish W1. The close was very bearish given the market lost the trend average and the 50 day ma and now the Intermediate Trend might turn red as well so unless the market rallies hard and overcomes the main resistance area of 1680-85, chances are the lows will be revisited. Nonetheless, the market has been correcting over 3 weeks and is potentially setting up a base for a bigger rally. But for now, we'll let the trend guide us through the turbulence.

I bought back VXX at a better price at 1667 and keeping it until the market trades above the 50 dma or tests the lows for this month.

Main S&P 500 Trends*

Short Term Trend = Bearish

Medium Term Trend = Bullish trend being challenged

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.

Close above the 50 DMA and TA

I had a very busy day yesterday but I finally got around to look at the charts today. The market did not retrace for a right shoulder for the potential IHS as I was hoping and instead it has continue to climb. But most importantly, the close was above the 50 day moving average and the trend average so more bullish momentum could turn this into a full on rally if we go by those factors alone. Looking at the waves, we have 5 waves down of what could be an A or a W4 correction (since 1626 did not get breached), which implies we are either on a B wave or the final W5. Alternatively, the recent low can be a W2 of the LT Int W5 that targets 1800-1900. Whatever the case. the trend continues to be up for both long term and intermediate so I am expecting higher highs. This all goes in line with the fundamental picture for the world economy which seems to be gradually improving. Lastly, I wanted to clarify what I meant about the how the signs of a recession is what will cause the market to eventually sell off. I know many people feel fundamentals are lag indicators and they are technically right, but what I should emphasize on my statement is on the "sign" part. Usually, the stock market starts selling off before the recession officially occurs and by that time it is already too late to get out. But in looking for signs, I am looking at unemployment claims, monetary/economic policy and consumer related reports. I remember back in early 2008 the Bush administration was sending out $200 to everyone as an "economic stimulus"(and some people thought it was out of the goodness of the heart). That to me (in addition to other reports) meant the recession odds were very high as it seemed to me as a last ditch by the government to prevent a recession but we all know what happened next. So next time recessionary forces resurface, we will see similar signs and that coupled with trend confirmation will save people on here a lot of money. But in the meantime, as I said the other day, the markets will continue to go up until there are any hints of a slowdown.

I ended up closing my VXX position at a loss once the market crossed the 50 DMA. I will reconsider buying if the market gets up to the 1680-85 resistance.

Have a Great Weekend!

Main S&P 500 Trends*

Short Term Trend = Bearish trend being challenged

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.

Market Update

The market did not follow through with yesterday's selling in the cash market today. Instead, there was relatively more substantial downside in after hours trading prior to the China and European PMI release. So it seems likely the bottom is in for the wave from 1709 and a pullback tomorrow sets up a potential IHS pattern again. This coming counter rally could be a B wave or the start of a 5th wave since 1626 was not breached, so we'll keep an eye on how the market deals with the 1680-85 previous support which is now resistance. I know some are questioning whether the rally is over but as I have been saying for for quite sometime, as long as the economy shows no sign of recession the markets will continue to go up. To be specific, the market should go up in tangent with the rate of GDP growth + Inflation more or less.

I bought back VXX around 1656 today so I hope we'll get the retrace for the right shoulder of the IHS tomorrow.

Main S&P 500 Trends*

Short Term Trend = Bearish

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.

Bearish 5 wave count

The market failed to bounce as I was expecting and instead it put in lower lows and lower highs, which implies further lower lows ahead are likely. The choppy bearish micro 5th wave count was valid for what now seems like a bearish W3 and the bounce yesterday looks like it was a W4 counter rally. So I am giving a bearish count to the micro waves that followed the high of the day and we'll find out tomorrow how this wave evolves. If the micro wave count is correct, it implies a target in the 1620-25 area which would complete a bearish 5 wave count from 1709 to possibly form an A leg. Which would make this a W2 correction from the 1709 high and no longer a W4 I had been hoping for.

I closed my Google longs for another nice profit despite a somewhat bearish market and I am hoping the market will drag Google down tomorrow so I can re-enter that position. For now I am all cash on my short term trading account.

Main S&P 500 Trends*

Short Term Trend = Bearish

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.

Inverse Head & Shoulders targets 1672

The market seems to have found a bottom today to start its counter rally and so far it looks like there is a W1 wave finished on the micro count. Also, there is an Inverse Head and Shoulders pattern that targets 1672 which is about the area the Trend Average will be tomorrow or Thursday. What happens after the test of the TA should decide the rest of the month as failure to recapture will mean lower lows ahead. As it is the market has an ABC finished and it would be ideal for a W5 to start here. But that is all up in the air until the short term trend signal confirms it. Also, one possible scenario that might be in the works is a bigger IHS with 1670-80 as the first shoulder so I will be on the look out for that one.

I was tempted to trade the micro count but I am just going to stay put and wait it out. Maybe when we get to the target range I will be able to buy back the VXX I sold last week at a better price? we'll see.. lastly, I wanted to clarify something about my post yesterday on the ads on the site. I realized most people don't know that most of the ads you see on the web are served on the Google adsense platform, in fact I wouldn't be surprised if 80-90% of web ads are run by Google. So when I said I made more money trading Google than ads, I meant their (Google) ads. Google's dominance on the web is what will make this company eventually more valuable than Apple imo. Unlike the MSFT vs APPL rivalry or INTC vs AMD, Google has no competitor.

Main S&P 500 Trends*

Short Term Trend = Bearish

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.

50 Day MA

The market closed again under the 50 day ma and at the day's low which is a warning sign to people holding longs in this market. However, I see a 5th wave that sort of resembles a descending wedge so I put some labels on it and we will see if the market follows it tomorrow. Odds are we will see a counter rally to the TA since the market is very oversold so I am positioning myself for this move.

I sold all my longs today when the market failed to recapture the 50 dma but I bought back Google after hours for a better price. Google did fairly well and I made more money trading it than from all the ads on the blog in one month, so we're off to a good start :) I sold my short term FXI longs for a decent profit too but keeping my core long term position intact for the foreseeable future. So should the market test 1626 without bouncing (which I think is slim at this point), I will add to the Goog margin long position using FXI proceeds.

Main S&P 500 Trends*

Short Term Trend = Bearish

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.

Rally to TA next week?

The market tested the 50 day moving average and key support today and spent most of the day hovering around that level but closing slight under the 50 dma. The market is now oversold enough imo for a decent bounce and we might just see a rally as soon as early next week to the Trend Average. The market has retraced enough for a W2 of LT Int W5 but I am still leaning towards this being the W4 of W1 of LT Int W5, specially since a rally from these levels would make a good 5 wave count if it ended around 1720-30. So we'll just have to wait a bit more to see what is the bullish response to the "sell off". I've read about the Hindenburg omen and the start of a major correction and so on but just as I've been saying on every single correction, let the charts speak for themselves and see how the market deals with the TA as that is the main catalyst. That and the fact the count we've followed here has worked for couple of years already and made us money.

I bought Google as planned, so now 50% of my margin is long FXI and GOOG. This is my first time owning Google but this is one of the few companies I wouldn't mind owning for the next 10-20 years as their dominance will continue to grow. So maybe I will make it one of my preferred trading stocks.. we'll see.

Have a Great Weekend!

Main S&P 500 Trends*

Short Term Trend = Bearish

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.

Market Update

After almost 2 weeks of bouncing around the 1680-85 - 1700 level, the market finally made a substantial move. The Head and Shoulders pattern proved valid after all and the TA signal was right on the money as it finally turned red yesterday. Unfortunately, my "instinct" was off by closing the hedge position yesterday but it's all good as profit is profit and these moves allow for trading opportunities. So now that we got this "sell off", the count looks a little more clear and we have the critical 50 DMA very close. The move from 1709 could be an ABC with the C wave being complete or almost complete, alternatively this could be a W1-2-3. I still think 1709 was the W3 of W1 of LT Int W5 so we are still in a W4 unless 1626 gets breached.

I am keeping my FXI longs and will be adding Google if we get another 50 day ma test at 1657 (I was asleep as usual so I failed to notice today's low came within 1 point of the 50 dma so this might be it). Also, I'm sure I will revisit VXX eventually when it goes back down from my exit price.

Main S&P 500 Trends*

Short Term Trend = Bearish

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.

Short Term trend bearish confirmation

The market is now back again in the 1680-85 level for the 8th time since late July but this time the Short Term Trend is bearish due to the TA turning down, so we'll see if the bears are able to break this fairly robust support level. The TA signal usually gets whipsawed on W4s so I wouldn't give it as much weight as I normally do and the potential 5 wave count I posted about yesterday still remains in place until 1682.62 gets breached. The market has obviously been in a correction for a while but so far it has corrected mostly on time and little on price and unless there is some major excuse for a stronger bearish wave, my guess is that even of we get a "sell off" the 50 day ma will likely hold.

I sold my VXX again at support early morning for profit and will be looking for another entry point for position trading.

Main S&P 500 Trends*

Short Term Trend = Bearish

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.

New 5 wave count to 1700+?

The market managed to test the level I mentioned yesterday for the 7th time to bounce right off. But this time there is a a chance the bounce wave could be a bullish W1 so we'll have to wait for the wave to complete and see what the reversal looks like. So far it looks like the W3 of this bounce wave is done (one could argue for a complete 5 wave micro structure) and the retracement towards the end of the day was its W4 on the micro count. And as I said yesterday, the 1680-85 level holding is a good thing for the bulls and the longer it takes to break the 1680-85 level, the higher the chances we will see a rally to challenge all time high. Looking at the fundamental picture, the fairly positive numbers coming out of Europe, China, Japan and the US sets a floor to the likely correction in the US markets once QE is taken off. And perhaps we will indeed see SP2000+ in the next couple of years. Now, if China would just double from here during this time I'd be a retired happy camper :)

My FXI position I took in June is finally looking good but instead of closing it to take profit I chose to buy back the VXX position to hedge it. But I'll continue to position trade VXX until we reach a point where I can hold on to it.

Main S&P 500 Trends*

Short Term Trend = Bullish trend being challenged

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.

Market Update

The market tested the 1680-85 area again early today and bounced off right off. This level seems to be giving bears a challenge as there have been 6 relatively sharp bounces off this level. So while one could argue the case for an Head and Shoulders like formation, all these bounces have just been buying time and resetting oscillators. The close today was under the Trend Average again and it will turn red unless the market recaptures it so we'll see if the bullish side will be able to do that and trade above 1700 on the next bullish wave.

I didn't trade today as this is looking like a W4 and I rather just buy back what I sold last week when and if the 5th wave appears.

Main S&P 500 Trends*

Short Term Trend = Bullish trend being challenged

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.

Market Update

The marked opened up bearish today but loses were again reversed just like yesterday. However, the market did close under the Trend Average and it could be potentially setting up a bearish nested 1-2. At the same time, there seems to be strong support in the 1680-85 range and should the bearish wave fail to make lower low it will open up bullish possibilities. The only pattern that is clear is the 5 waves down from 1709 but nothing else that I consider tradeable. My SH position was positive early morning by got stopped at break even on the counter rally and I am position trading VXX. My long positions have been intact as usual and I don't think I will be trading those for quite some time.

Have a Great Weekend!

If you haven't taken the sentiment poll, please do so at:

http://trendingwaves.com/forum/viewtopic.php?f=3&t=4

Main S&P 500 Trends*

Short Term Trend = Bullish trend being challenged

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.

Market Update

- For some reason this post was not published yesterday when I intended to post, I just realized now that it did not post. And no I did not tweak the count to fit what's happening today :-) -

The market made it to the resistance level I had been expecting and it seems like there is a new 5 count starting. However, there is also the possibility that there is a more upside up to the 1705 level before reversing so we'll find out in the next session or two. And obviously this could be a bullish W3 as well but I don't think that is very likely. For trading purposes, I am assuming this is a bearish 5 wave count despite the near invalidation on the counter rally but anything less than a strong bearish wave tomorrow and I will probably cover the SH position I bought today at 1695.

If you haven't taken the sentiment poll, please do so at:

http://trendingwaves.com/forum/viewtopic.php?f=3&t=4

Main S&P 500 Trends*

Short Term Trend = Bullish trend being challenged

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.

Lower lows ahead?

The market follow through today with the 5th leg of what should be an A or W1 and counter rallied the rest of the day in what I see as a micro 5 wave, so perhaps we will see an ABC pattern that will challenge 1697-99 and the Trend Average in the process. As in the past, we have seen simple 5 wave corrections that were followed immediately by rallies so one has to be ready for more upside in case 97-99 breaks. But odds favor further downside, specifically if the bounce is stopped at the 97-99 area then we should see a 5 wave structure to challenge 1676. I had been expecting this correction but we still don't have enough to know whether this is a W4 that will be followed by a bullish wave to an all time high or a W2 that will be followed by an much higher high.

My plan was to go long today at 90-91 but since the gap took the market down to 1685 support I went long there and sold at the end of 5 micro waves at 1693. My VXX position has gotten better but still underwater so in the meantime I will have to subsidize that position with my other trades.

And if you haven't taken the sentiment poll, please do so at:

http://trendingwaves.com/forum/viewtopic.php?f=3&t=4

Main S&P 500 Trends*

Short Term Trend = Bullish trend being challenged

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.

More downside to come or just another correction?

The triangle the market was following yesterday failed to hold today so I am switching back to the count from last week with 1709 as the top for 5 waves completed from 1682. Also I am watching this bearish wave to see if it completes a 5th wave to the 1690-01 level, a 5 wave count would increase the odds of a bigger correction. But the ultimate indicator obviously will be the short term trend so we need to see consecutive closes under the Trend Average. If we get the bearish signal the level to watch will be 1676 as a break of that level will mean the market will likely be headed to the 50 day ma.

I am holding the VXX  position and will probably add longs if we get a 5th bearish wave tomorrow to trade the bounce.

And if you haven't taken the sentiment poll, please do so at:

http://trendingwaves.com/forum/viewtopic.php?f=3&t=4

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.

One more bullish wave left?

The market corrected today by "selling off" in the morning but spent the rest of the day working on a possible triangle. Which means the 5th wave completed on Friday was for a W3 and we saw part of a W4 today. So we should see a higher high coming in the next session or two to complete the structure from 1676 and then start a larger correction. The economic environment seems somewhat optimistic and gradual improvements around the world will continue to support the market going higher. All this QE and low interest rates will end in the not too distant future and send the markets into a major correction but in the meantime the path of least resistance is way up, so one has to position oneself accordingly.

I ended up closing my SH position again for yet another minor profit as Friday and leaving the VXX position intact. I will be buying back SH to hold for a while towards the end of the 5th leg.

Please vote on your market views for August.

For July, despite a majority bearish sentiment the markets ended up going up 2% since the time the poll was initiated.

August Market Sentiment Poll

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.

Stronger correction next week?

The market put in a W4 as expected today and rallied past yesterday high which technically satisfies a 5 wave count from 1682. The ideal projection for the end of this 5 wave count would be 1714-18 (re-calculated it today) so this last wave has room to go but with 1709 meeting 1.618 of W1 (1560-1626), the market is ready to go into a W4 correction that could end up testing the 50 day ma as soon as next week. This has been quite a rally that started with no news so I think it's about time for the market to take a break.

I ended up selling my SH position for a small profit today and bought back at 1709 at the end of the day. My VXX is horrible but I got the stomach for it, maybe it will start go up in the next week or two.

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.

Market Update

I have been driving most of the day but I am finally back home (drove 800 miles in the last 24 hours) to go over the crazy waves we just had. First of all, I did not see a break out coming at all based on all those choppy waves, oscillators and the Trend Average. The only one thing that was  technically bullish was the Inverse Head and Shoulders (which target was met today with today's high) but as I said a few posts ago, they typically are straight 5 wave counts and not something as corrective looking as this. In fact, I have to sit down and think about how to label the mess. But to simplify things, I am just going to focus on the micro count that has cleared waves and that is the one with the 1682 low. Assuming there is a 5 count from 82, then we should see this particular wave at 1719. Now, presumably that should be a W3 so if the structure follows a more normal path then an even higher number should be expected. With that said, I have 1711 as a 1.618 level or the ideal end of a W3 of a structure that started from 1560 so we'll see what the market does if it reaches that level.

I ended up adding the other 50% to the short/hedge position at 1707 but I will be taking profits on anything less than a substantial impulse down and will buy back the position on rallies. The market did the exact opposite of what I predicted yesterday but one thing I am sure is that a test of the 50 day ma is very likely once the remainder of the waves are in.

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.