Wednesday, September 11, 2013

Market Update

The market has now gone up for 7 sessions in a row from its 1628 low and it is within striking distance of its all time high. Looking at the waves, it seems like the nested W3 has topped or getting close to it. If we apply a Fib 2X W1 of the nested count, we get 1692 as an ideal top. Also, there is a layer of resistance in the 1697-1700 area so I assume we will see a W4 pullback in the next session or two. If the market somehow manages to cut thru this resistance level then my assumption is 1709 will be challenged without a retrace. I ended up buying some VXX as a hedge at $14.53 and I will be selling them on the pullback, which I assume will end up around the 50 day ma and 1676.

The market doesn't have as much fear now that Obama has retreated somewhat from its earlier aggressive stand (I think he is needs to understand that people are sick and tired of unnecessary wars, specially when national security is NOT as stake). So if the expected Fed tapering is lighter than expected, then the conditions will be in for the continuation of LT Int W5 to 1800. There is still the possibility of a B in a flat (that calls for a C to test the 1628 low) but chances are looking dimmer and dimmer for each point the market rises.

Main S&P 500 Trends*

Short Term Trend = Bullish
Medium Term Trend = Bearish 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.

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