Saturday, October 5, 2013

50 DMA recaptured

The expanding flat count I posted Thursday seems to be evolving as projected. Going by the micro count, the C leg of this expanding flat is playing out and once over it should get interesting. The market should either go down in a C or bearish W3 leg or resume the bullish leg that started at 1628. With the ongoing political drama in Washington, I don't really see a big rally before the main issues are resolved. But then again, I didn't think the market would hold up this well considering the government has shut down for almost a week. Also, small caps reached an all time high this week and the NASDAQ is also at a post internet bubble high which are signs that investors and traders have a "risk on" attitude.

So given the different potential scenarios (which are as good as flipping a coin), I am trading with the trend. I am fully invested on my long term portfolio as usual but I am all cash on my short term portfolio. I sold my GXC at a good profit on Friday and again will take positions only at key levels, which are now support at 1670 or above the TA. I've been realizing lately that I am much more comfortable being long on a stock I have confidence in than being speculatively short, when I am holding something like VXX I just don't sleep as well, even if it's a minor position. Whereas holding a stock like Google is completely ok since I actually own a piece of a company which business model I understand. So from now on, I think I will start doing only or mostly long positions on my short term trades.

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. 

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