TA being tested

The market tested the Trend Average as I had been expecting and bounced right off and I suspect the low today at 1755 was the end of the micro 5 count I had been tracking. So if we don't see another counter rally high tomorrow and today's lows break then I expect 1747 to provide support and then 1740 if that level fails. My plan was to sell VXX at the TA test but I was asleep, so I'll wait for the C wave to come to test the levels I mentioned to pick up some profit. I just hope the micro 5 to 1755 was "the" correction as I've seen several 5 wave W4's this year already.

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. 

 

Correction

The correction I had been expecting started today and obviously we now need to see what degree of a correction this will be. But as you know I enjoy projecting targets so if what we saw today was part of a micro 5 wave count, then I have 1750-55 as the target for the first leg which I will label "a". I am looking for 1740 as support for the entire correction, so perhaps that will get tested on the "c" wave. I'll probably take some VXX profit at around the TA and will be buying back on the bounce.

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. 

Getting close to correction?

I had a very long day today dealing with legal bills in mediation but I am home and I am done with all my major "to do" projects for the rest of the year, so I guess I can finally relax for the rest of the year. Anyway, the market continued its bull run today which was not all that surprising but I do think we will see a profit correction very soon to the levels I mentioned yesterday. So I decided to add some hedge at 1769 by way of VXX, which I said I would not trade again but the damn thing is so tempting at this price! so I have a small hedge and hopefully I'll be able to squeeze a dollar out of that. I am keeping my long position I bought couple of days.

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. 

Correction to TA?

Now that the market has made another higher high that makes the micro 5th wave look more proportionate, I think there is a good chance we will see some sort of correction starting in the next session or two. If this is the end of the stand alone W3 then a good level for a retrace would be 1740 or basically a Trend Average test. I'd be surprised if we see a stronger correction without another new high but one can never be 100% sure. When the stronger bearish wave comes it will probably be a profit taking correction and not a fundamental change in the economic background that triggers it, so at some point we will see a bottom (around the 200 dma?) and the markets will keep going up and up. The US economy continues to grow, Europe has come out of recession and Asia looks stable so we have a good recipe for a continued worldwide rally in equities and other assets. And this is in addition to a weaker dollar, which probably will end up trading at 1.40 vs the euro very soon. Funny how fast people can forget (EU PIIGS bailouts)..

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. 

New High

It's been now two weeks since the market put in a Bullish Engulfing Pattern and the original target I had that day (1760) has been reached.

"If this is the start of a 5 count then expect 1760 more or less, assuming we see a reversal without taking out the 1695 resistance (which makes W1 around 45-50 points)."

Now the issue is the bullish wave from that date has turned into what I call a stand alone W3, which is a W1 and W3 fused together by a minimal W2 so there was no reversal to speak of. And since these waves are rare and I don't have enough data to project, I don't want to be calling a top before I see some sort of reversal pattern. So far I count two sets of bullish 5 wave counts and today's high could serve as a final 5th. However, this 5th could easily turn into another 5 count so we'll have to see what early next week brings. One thing that I just realized is the dollar weakness and how that might be playing into the stock market. QE aside, usually a weak dollar gives the market a reason to rally since a cheaper dollar translates into higher USD profits and at the same time adds to inflation. So as long as there is a weak dollar in the background and positive corporate earnings the markets will find it easier to make new highs.

I also added the long term chart to put into perspective where the markets are in relation to the count. Note the price labels I have on there were put in before the market top in May and the market has followed these levels more or less. Since we are seeing a breakout of a broadening formation, the usual target for this pattern would be equivalent to SP2000+ once the 5 waves are complete from the 666 bottom. Also, I added a picture I took in China couple of days ago. Those tall buildings in the background are probably half empty but somehow they still continue to build and people continue to buy. I am not sure if it's a product of a command economy or speculation but plans are to make that a financial center in Southern China so they build all these class A buildings and top infrastructure and assume the area will be booming in a few years time. That's not how things usually work but somehow it has happened before in China, in Shenzen to be specific.

Have a great weekend!

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

The market bounced somewhat today and I am not sure if prices will come down to the TA or the TA will end up catching up to the market as we have seen in strong rallies this year. The market does need to consolidate gains so it will do so in price or in time before resuming another bullish leg to a new high. As it is the market has already come within 2% of the 1790 target I had in May, so in looking at the overall waves the market might be reaching a point where there will be a much longer correction than we have seen in recent months. But given the most recent wave counts, this market is free to extend so no point in trying to guess the top.

I ended up buying back GXC since there's some sort of liquidity concerns in China but it's the same old story. China is interesting in the sense that all the money that disappeared from the stock market went straight into real estate, prices in relation to rental income are completely out of proportion. So it's just a matter of time where all that RE money will come back to the stock market. Yours truly is making a huge bet on it..

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. 

TA Test?

I just got off the plane couple of hours ago but wanted to get this uploaded before getting some rest. Basically, that stand alone W3 is still in play and I think these is a good chance this wave will resemble the wave from January. So I think the TA might get tested but will continue to hold until we get higher highs to satisfy a 5 count. And yes I know many think these market levels are unsustainable and what not but I've heard the same thing since the 1000's (and we are at 1700's!!), so best is to stay with the trend and the let charts speak for themselves.

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. 

Update

I will be updating again when I get back on Wed night as I am having problems access blogger from here. But it looks like the market will be rallying some more as expected.. we will see.

Another all time high

The market continued its rally today and closed again at an all time high. It looks likely to me that we are dealing with a stand alone W3 and perhaps we'll see the W4 early next week before higher highs.  The DOW is lagging behind in this rally and the SP500 could be in an Ending Diagonal but looking at small caps and technology, those markets have broken out of their potential Rising Wedge pattern so the SP500 will likely follow.

The key drivers to the markets now are going to be earnings, so a decent season will add fuel to this rally. I am still waiting for an entry point since the market hasn't not tested the TA and one thing I will remember next time I see a Bullish Engulfing Pattern is to stay long. And as I've said before, as long as there are no signs of recessions or anything that could lead to a recession the markets will continue to go up.

Next few updates will be from Southern China. I have a cold from recent travels and I'm hoping I'll be better by tomorrow night for a 15 hour flight.. Have a great weekend!

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. 

All time highs

Original Post: The market ended up "selling off" on the budget resolution news but it was short lived as it reversed and closed at an all time high as I was anticipating last week if we had a resolution. I will add more later (on the market action today and my take on the longer term count) but you can see my attempt at labeling a stand alone W3. You won't see these sort of labels anywhere else as this is my own creation and not a standard wave principle concept.

I am btw regretting not holding on to my Google shares.. arghh..

---
So now that the high was taken out we can confirm the wave to 1627 as a corrective wave and as such I can start projecting targets for the current bullish wave. The one thing that makes this wave tricky is the fact that I am counting it as a 5th wave so it has the potential to end up in an Ending Diagonal or Rising Wedge. But if I were to treat it as a normal Wave 3 we are looking at 1868-1888 for the end of this wave or maybe even the entire 5th wave including the Wave 5. We'll just adjust as we go along but as of now this rally looks like it's just getting started.

Also, I posted a longer term chart I last updated in May since I posted about the different theories on market predictions yesterday. On this chart note that I posted preliminary targets for W3, W4 and W5 on that date prior to the market topping in May. Going by Eugene Fama's theory, the business of predicting markets is as good as a coin toss but if we break down the odds of this chart being right, odds would favor Shiller's theory on the market's having a psychological element. So I did an statistical calculation based on a few permutations to figure out the odds and this is what I found.

Odds of getting the turning points correct: 1/8
Odds of getting price direction correct: 1/8
Odds of getting the first two turning prices correct within a 2 % margin : 1/25 (this one is subjective and based on experience)
Odds of this chart being correct today relative to when it was posted vs a random chart: 1/1600

That's 1 in 1,600 and I am not including other permutations such as the time frame element nor the previous periods where right predictions were made. The third permutation is subjective as I am basing that on experience but I think that would be about right. So taking this into account, one could argue that markets CAN be predicted with some level of accuracy using the tools I have been utilizing. Obviously, this could have just been random luck so the point to this whole blog is to find out over the long term whether or not these technical analysis tools that I am using provide an advantage over the buy and hold strategy. I'd like to believe there is an advantage but I won't be sure until I see returns during 3-5 year term in bull and bear markets. If you have ever wondered why I am so dedicated to analyzing the market, this is the reason. I want to know for my own sake whether or not I am better off actively managing my money or leaving it alone in an index fund. If you are good at statistics please feel free to provide your input on my calculation.

Last but not least, since we're talking about the business of predictions. Unlike wave theory where one has to call the ups and downs of the markets, there are the likes of Marc Faber who just couple of days ago was speculating on Apple going bankrupt.. as a doomer, he will eventually be right in something bad happening but when you make the same prediction every single day then it's really no better than a broken clock being right.

My favorite Marc Faber prediction: http://www.cnbc.com/id/47566735

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. 

Gap up or sell on the news?

The market had another strong day today and it is just a few points from an all time high and I am assuming the high will be taken out when the House approves the extension of the debt ceiling and the re-opening of the government. The Senate just passed the bill as of the time of this post so chances are good we will get this issue out of the way until January. So now the question is will we see a huge run tomorrow in some sort of bullish W3 (the micro count supports it) of a stand alone W3 or a sell on the news event. I am wishing for a sell on the news scenario where the market will test the TA so I can load up on longs but I think the case for a continued run is stronger. That Bullish Engulfing Pattern is usually the start of a powerful rally and it seems like this time won't be any different. I guess we'll find out in a few hours..

What happens tomorrow btw ties in very well with the recent economics Nobel Prize. For those that are not familiar with the theories, the concepts formulated by the recipients is related to directly to the stock market and all other asset classes. On one hand we have Robert Shiller whose theory on asset valuations assumes prices are distorted by emotional factors, leading to irrational exuberance and bubbles. At the other end of the spectrum we have Eugene Fama whose theory assumes market is always efficient, meaning assets are perfectly priced by the market because participants are able to price in all relevant available information. So during a bubble, say the US housing market prior to the crash. Shiller assumes prices where out of control because buyers were in manic mode vs Fama who assumes buyers priced in all relevant factors such as easy mortgages and a competitive buyers market. In a way it's ironic they gave the prize to people who contradict each other but at the same time they are both technically right. Using the S&P500 as a guide, if we believe in Shiller's theory 100% then one would be able to time the market and have substantially better results than the buy and hold method. But the fact is there are very few people in the world who actually have been able to beat the S&P500 over the long term and the one person who has managed to do that consistently (Warren Buffet) is a buy and hold proponent. Personally, I think over the log term markets will price assets appropriately while during shorter periods of time markets will have the tendency to be affected by emotional biases. In fact, this theory mirrors my own portfolio where I have invested most of my funds in markets I consider to be undervalued in hopes valuations will rectify over the long term while I trade short term market moves. But the real question is, do we really have an advantage using Technical analysis and Wave theory to beat the market. If you believe Shiller, that would be a yes. I like to real time test stuff, so I will come to a conclusion in a few years as I will be able to compare my own results. As of now, I lean yes but I am not 100% sure just yet.

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

One of the best things of traveling is coming back home and I just got back home from my trip, it was so quick I barely had the chance to get jet lagged but I am tired. So I am going to make this brief, basically the market is waiting for a last minute deal so we should see a big move out of range by Thursday. The market is pricing a resolution so if the opposite happens then we will probably see a big sell off but I think politicians have enough common sense to resolve this and move on. And since we are down to the wire, I rather wait for the results and trade from there to minimize risks and catch up on some sleep :)
 
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.

Daily MACD Bullish Cross

It is midnight where I am writing this (In Munich for couple of days) but the markets just closed couple of hours ago, so it feels weird to be writing about the markets at this time. If I lived here, I would actually be awake during market hours..lol. Anyway, the market corrected somewhat early morning in what seemed like it was going to be a "sell off" but instead it turned into a bear trap by quickly turning around and ending at the second highest close ever while the Russell 2000 made an all time high. And if a deal is reached today/tonight then we will probably see the SP500 all time high challenged. The daily MACD has made a bullish cross and the market has gained in 3 days most of what the market had lost in the previous two weeks, so things are looking bullish. I was tempted earlier today to add longs to my short term account but I wanted the market to get closer to the TA so I guess I'll just have to be patient. At least I am already fully invested so I can't really complain.

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.

New all time high this month?

The market continued its bull run today and if a solution is found over the weekend we might see a stand alone W3, meaning there won't be a W2 retracement and the market will shoot straight for the all time high. The best example of this pattern was the wave from the Fiscal Cliff resolution on Jan 1st (which was also a Bearish Engulfing Pattern), that wave just went up with just a few sideways corrections. The market is pricing in an agreement early next week, so we'll see if the market is right. The wave count looked complete yesterday and now it looks like the 5th is extending but under normal circumstances we should see a correction of this wave for a W2 to perhaps the TA now that 1670 looks less likely.

I am in cash since I sold yesterday and you can see now why I'm avoiding shorting the market. I just hope we get a good correction so I can buy back longs and if not I'll just have to wait until the market decides to test the TA. I knew when I saw Doug Kass on the news last week the bottom was probably in! lol.. the man had quit tweeting his bearish opinions early summer and just when he thought he was going to be finally right.. he gets a BEP.

Have a great weekend!

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.

Bullish Engulfing Pattern

I was expecting a bullish wave yesterday that was going to test the 50 DMA but we got a lot more than that today. The wave from yesterday was a W1 and the 1685 target was reached just on its W3 so I won't be surprised if we see more upside before seeing reversal. And given the strength of this wave and the potential resolution to the stalemate in Washington, odds favor we are seeing a continuation of W3 of LT Int W5. The candlestick pattern was a Bullish Engulfing Pattern which has been very reliable every time we've seen it in the last year and we might see an Inverse Head and Shoulders formation with 1670 as the ideal right shoulder. However, we might just get a very shallow correction to the 50 DMA/TA or even less before a very strong bullish wave that will take out the all time high. If this is the start of a 5 count then expect 1760 more or less, assuming we see a reversal without taking out the 1695 resistance (which makes W1 around 45-50 points).

I ended up selling my short term longs as planned for a decent profit when the 1685 target was met. And I am hoping we will get an IHS set up to buy back at a cheaper price and then enjoy the ride. And obviously should the market be able to reverse all its gains then I will consider a bearish alternative but things are looking up for now and the trends should go back to green as long as the TA and the 50 DMA hold.

Short Term Trend = Neutral Leaning Bullish

Medium Term Trend = Neutral Leaning 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 DMA Target?

The market was not finished with the entire structure yesterday as we saw a clear 5th leg that reached the original 1650 target. But now that we have what appears to be the entire 5 wave structure (unless we get an extension), I am looking for the bounce to the 1670-74 I mentioned yesterday but given the counter rally wave from this morning, if I were to label that as a bullish W1 then we would get 1685. So there's a very good chance the market wants to test the 50 DMA or the TA on this bounce. The counter rally can be counted as a completed 5 wave or a complete 3 wave (the inverse of yesterday) and obviously it remains to be seen if this counter rally is just a bounce or the start of the resumption of this year's market rally.

I will sell hopefully tomorrow if we get a good bounce to lock in some profit get back on the sidelines.. assuming the market doesn't close over the 50 DMA.

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. 

Intermediate trend change?

The market went for the bearish 5 wave micro count and it got close to the 1650 target, so the entire 5wave count could be done or it could just the micro 3 ending. Whatever the case, I expect a counter rally to the 1670-74 resistance area and what happens there will probably give us an idea of what will happen the rest of the month. The TA has been red for more than a week and unless the market is able to re-capture the 50 dma then I expect lower lows to follow as the Intermediate Trend will probably lost as well. The market has a great excuse to sell off and so far there is no solution in sight to the whole government shut down and the debt ceiling debate. Unless resolved, the rally will come to an end.

I ended up going long on GXC when I first woke up because of a successful test of 1670 but by the time I woke up again and the market had broken support and had dragged down my stock. So I am officially holding a bag now but it's not too bad and I am sure I will get out of it in green, perhaps on the coming bounce.

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. 

Market Update

The market lost the 50 dma again and I think the market is starting to price in potential risks from the ongoing Washington drama. Every single counter rally attempt since the Trend Average has turned red has stopped short of the TA and now that the market could lose the 50 dma, the odds for a more pronounced downturn increases. If the political situation does not improve and the government defaults on its obligations, we should see interest rates spike and most likely go into a recession. With that said, there are still some days left and I'd like to believe the Tea Party Republicans are able to see the huge damage that this causes to the country despite their good intentions. Also, on the charts I see a potential bearish count targeting 1650 based on the bearish wave today. If the market fails to make a lower low then an Inverse Head and Shoulders is in play targeting 1716. If the short term trend was bullish I would give the IHS a good chance but given the red TA and the current deadlock I think the market will continue to sell off or get stuck in this range until we get some clarity.

I didn't get a chance to trade today but I will go long for a short term trade if the market starts hesitating with a lower low tomorrow. A strong gap down would mean the market is on the way to 1650 where I will then pick up some shares.

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. 

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. 

Expanded Flat?

The market seems like it completed its impulse down by putting a low of 1670, just a bit short of the Head and Shoulders projection but in the target range of the bearish 5 wave micro count I pointed out yesterday. At one point it looked like there would be more downside to come but the bounce went a few points into micro W1 territory and invalidating a bigger 5 wave count, so technically we should see a counter rally as soon as tomorrow. So far it looks like the 1696 top was an A and the low today was a B of an expanded flat. Also, the 50 dma finally broke so bulls better recapture it soon or risk further downside.

I ended up buying GXC, also a China ETF that has more tech in it. I was also thinking of buying RSX (Russia) but I'll wait and see how this correction evolves.

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

The market gapped down at the opening to test the 50 day moving average again after the micro 5 wave count I was tracking yesterday completed in after hours. So the chart shows a truncated 5th and the gap down is possibly part of a micro B wave or maybe even a bearish W1. I think we will find out what the market really intends to do in the next couple of sessions. There is a Head and Shoulder's formation that targets 1664 and if the gap down today was a bearish W1, I have 65-70 as the target for completion. But first we'll see if the bears are able to break the 50 day ma, which I had been expecting the market to test when the correction started almost two weeks ago:

"There is a good chance the market will test the 50 day ma at some point during this correction so we'll see how this count evolves"

So this correction is technically going as planned so far. The one thing that I have to change is the assumption that 1729 was a peak of W3>W1>W3>LT INT 5, it looks better as a nested 1-2 as you can see in the Long Term Chart so the market should be working on a W2>W3>LT INT 5. There is also the possibility of a rising wedge so we'll keep an eye on that. For now I am trading according to the Trend Average, which has done a good job in keeping me on the right side of the trade.

Today I ended up buying Goggle at the 50 dma test and sold it back at the same price as yesterday for a quick buck. And I am back to cash waiting for either the bearish scenario to play out and load up for the bounce or just go back long at the successful break of resistance. If the Tea Party Republicans in Congress keeps fighting Obama, they could successfully derail the market for the rest of the year and even send the economy into a recession if the same thing happens with the debt ceiling. I wonder if these people who shut down the government actually get paid during this period.

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. 

Trend Average

The market rallied today despite the government shutting down, which in a way was a surprise to me. But technically speaking, a bounce was due since there is a 5 wave structured finished. Not exactly a very impulsive structure but it looks like the most likely count. And the micro waves today show a 5 count targeting the trend average, so perhaps this is some sort of Zig Zag or a bullish wave one. We'll just have to wait and see if the market can trade above the TA again and bring it back up. But given the fact that Washington will have to deal with the government shut down and the debt ceiling in the next couple of weeks, the fundamental picture doesn't look too supportive of a rally.

I ended up selling my Google position for a small profit and now I am on the sidelines on my short term trading account. I want to see how the market deals with resistance first before taking any new positions since the close was well below the TA.

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.