Rectangle Top or Consolidation?

I guess traders did not bother to take profits today but instead have been buying options to hedge as the VIX has gone up but the market remains in a tight trading range. My VXX is actually in the green so I am having one of those rare "eating the cake and having it too" moments. The market is either topping in a rectangle pattern or is simply consolidating again for more bullish waves to come. You guys already know what I think and as I have said before the test will come when the Trend Average gets tested. A successful test and I am out of VXX but waves call for a change of trend so we'll see.. the suspense continues but I am actually enjoying it :)

Have a good Thanksgiving to those celebrating tomorrow.

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

Looks like the correction yesterday was a micro W4 after a micro standalone W3 so it looks like the market is done after putting another marginal all time high before reversing in the last few minutes. After such bullish run in the last month I would think traders would be locking in some profits before Thanksgiving so we'll see. My VXX position is hanging in there so hopefully it will start going up soon, it'll be nice to have some VXX money for Christmas!

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

A correction started today but it's too early to tell if it's a minor degree corrective wave to prepare the market for one more high or the beginning of a bigger correction. So we'll just have to be patient and see how the market reacts when it reaches the Trend Average. Most people seem to be convinced the rally will continue as the VIX is trading near the lows so perhaps some sort of surprise is coming or traders will use the tapering excuse to start selling off the market. I am holding on to my VXX and not adding any more positions. I am not bearish, just mindful of the fact that this market needs a healthy correction to bring fear back. Once you start seeing the doom and gloom gang in the news then you'll know the market has probably reached a bottom and ready to rally. What's interesting is that these permabears never appear when the market is actually topping.

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 start next week?

The market decided to ignore the right shoulder of the IHS I posted about yesterday and went for another all time high today. Technically speaking, there are 5 proportionate waves in from 1746 to make this the last wave of this year's rally. The wave I have marked as V is exactly 27 points or in other words the length of W1. It goes without saying that this V wave could easily extend or maybe even break into another 5 wave count and target the levels I have mentioned earlier this week. I called for a rally off this week's lows but now that the minimum requirements have been met I am expecting a correction to come as soon as early next week (if the V doesn't extend) so I am getting prepared accordingly. The coming correction is going to be interesting as the count I have calls for a higher degree correction and without doing much in depth analysis, my assumption is the 200 day moving average will make a nice target whatever level that might be when the market gets there. As of today, that number is 1644 and rising every day. Obviously, calling tops is an "counter trend" call and they are by nature inaccurate so we'll see how things evolve as these waves start to exhaust themselves. If one would have just followed the short term trend I post and ignored wave counts, technical analysis, etc. one would have out performed the market easily this year.

I ended up selling my short term longs for very little profit since it barely moved from where I got it and picked up VXX at a substantially discounted price (relative to my sell price earlier in the week). And should the market start evolving into a 5 count, I will sell VXX again and buy it back later. These volatility and 3x instruments are extremely risky to hold for longer periods of time. I am lucky I have managed to make some money out of it but I was looking at the charts for VXX for the past 5 years and if one would have purchased $7,500 5 years ago, it would be worth $45 today. In the case of TZA (3x short SP500), if you bought $10,000 just 2 years ago and not sold, you would have $8 today.. talk about decay! they should be banned come to think about it as a larger number of unsuspecting traders end up buying these without thinking. So be careful if you are tempted by their seemingly outsized returns.

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. 

  

IHS in the works?

The market started to rally today as I had been expecting/hoping and based on what I am seeing so far, we could see an Inverse Head and Shoulders or another stand alone W3. If today's high was W1 of W5 then it projects to 1825-30, which is higher than the IHS projection or the 1811-12 "ideal" ending of the wave. We just have to see how the wave evolves and then be ready for a bigger correction. I am keeping my short term longs until I see any signs of a reversal and load up on VXX or a triple short after that (Note that this is only on my short term trading account. I have been 100% long on my long term account for the past 2 years and will leave that intact as this bull market is far from over)

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. 

Trend Average Test

The market put in another bearish leg today that came down to test the TA and close right on it. Going by length of the waves, the "C" leg is equal to "A" so the market should start rallying to finish up the 5 wave count. Further downside that breaks 1773.44 will probably mean all waves are and we will see the start of a higher degree correction. Seems like QE taper will be the catalyst I was wondering about a few days ago, so we'll see how long it will take for fear to make a come back and bring back the "expert" bears who get airtime whenever the market is falling.. but we all know how that goes.

I ended up buying some GXC in hopes the 5th leg will start in the next session or two.

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 continued its correction today and if the bottom holds today, the structure could end around 1811 if W5=W1 which goes in line with a number I posted about two weeks ago as the alternative:

if I break down the "stand alone W3" and pick what I see as W1 then the projection is 1810-15 and if I add W1 points (66) to the low yesterday we get 1812.

So let's see if tomorrow will bring the last wave of the structure and push for a new all time high. I ended up selling VXX once I saw the 1785 level hit in the morning and I will be buying back hopefully at the new high.

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. 

Almost there?

The 1800 level I was speculating about last week was reached today but there seems to be one more push up before a higher degree correction. So for now I will be looking at the resumption of the rally tomorrow or further downside to test the Trend Average before one last push up. If the correction continues tomorrow it should not go below 1773.44 as that would technically invalidate the standard 5 wave count. Now, once all these waves are in, things will get interesting as it is technically time for a bigger correction but looking at the news and at sentiment there seems no other way but up. I guess we'll see if there is indeed any merit to all these wave counting business :)

And not sure if anyone here was able to catch the Bitcoin wave but wow.. I was hoping to get a retrace to $350 to buy a few coins just few days ago and today it reached $750 or more than 100% in a week. Too bad I didn't buy couple of months ago when it was at $120, I was ready to buy $15k worth just to diversify but all these trips and other stuff got in the way. Next time I see something with limited supply that has potential to attract lots of amateur investors, I will not miss it. That is a perfect combination for bubbles.

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. 

S&P 500 - 26% Return YTD

The S&P came within couple of points of reaching 1800 today and with today's close, the index is up 26% YTD and making this an stellar year for those who held their long positions. It is obvious that this is a W3 and anyone who thought otherwise have probably missed out or worst yet caught short. Had this rally happened few years ago, I am sure I would have been caught short too but thanks the trend average, I get out of the way when a top prediction doesn't materialize like it happened earlier this week. But now that waves are evolving accordingly, I am expecting a W4 soon and then one last W5 before another possibility of a top for the W3  from 1266. Make no mistake that I think we are in a bull market and the Long Term W3 count targets SP 2,200 so this is a good time to evaluate plans for this coming year and how to handle the coming corrections keeping in mind that this market will continue to go way up.

I had to close my longs (on my short term trading account) today because they just shot up too much for one session and I will pick them back up hopefully at the retrace. I also bought back the VXX hedge (technically not hedging since I sold my longs) at a good discount and I am planning to unload them when I buy back my longs.

On a side note, I am glad Obama is backtracking on his insurance cancellations. That saves me about $2000 a year as I was going to be forced to pay double (when he promised repeatedly people could keep their insurance if they wanted to) what I pay now to fund Obamacare so overall, a good day$.

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. 

1800+ coming

The market broke out of its previous range as expected in what is likely to be a W3. So I am expecting higher highs ahead, most likely in the 1800+ area before we see a bigger correction. As it is, my 1790 target has been hit and the entire LT Int wave is complete but that target just means W1 is equal to W5 and the market is free to extend its 5th wave. So for now, I am holding on to my longs and I am glad I sold my hedge yesterday as it is substantially lower already.

Additionally, anyone interested in buying Bitcoins to trade or to diversify, check out Coinbase which is the easiest place I found to buy and sell Bitcoins.

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 Highs

The market broke out of range today and now the bias is back to the upside, so I will now label 1746 as the W4 low and I am looking for higher highs in the next few sessions. I sold my hedge at the break of the all time high and for now I am assuming this new impulse will reach 1800+ if this evolves into a normal 5 wave count so I will be buying back the hedge then. I still think the market is reaching a significant intermediate top, so we'll see if the next change of trend will be the one.

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 has been keeping people in suspense with these relatively minor moves in the last couple of days but we should see a decisive move out of this trading range soon. The high from last week still stands so I continue to favor downside until a new high is made so I am looking for a test of the 1746 low and see if that holds. And as I said last week, if the 1752-55 range holds then we will be looking at 1800 on a break out so we'll see if there's any strength behind the current bearish wave.

I continue to hold both longs and volatility and will position trade accordingly. And stock market aside, does anyone here have a bitcoin account? if so where did you open it? I was going to open an account couple of months ago when it was at $130 and now it's almost $400 per bitcoin. The thing about bitcoin is that its number is fixed after computers finish mining it by 2020, so the more people pile in, the more it will go up. And since I trade with averages and trends, I could probably make a few bucks in that market given the fact that it will continue to go up a lot more before probably crashing/stabilizing. Aside from that, bitcoin or the ideal of an electronic virtual currency is here to stay IMO as there is a need for it given the need for currency diversification.

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

Not much to add today. The market attempted to make a higher high but it came a bit short so I am still waiting for the bearish wave to see how much of this bearish wave will be retraced.

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. 

Counter Rally or Impulsive Wave?

The market rallied hard today and erased most losses suffered yesterday and it managed to close comfortably above the Trend Average again to maintain the Bullish trend. However, the lower low yesterday is significant and until the market can prove itself by making a higher high to neutralize yesterday's low, the burden is on the bullish side. The 1752-55 area is very important and I think it will provide confirmation on which way the market wants to go. If the market fails to make a new high but the correction holds at the 1752-55 level, then we will have a bullish pattern again. And obviously, should the market make a lower low then it will be confirming a continued sell off. I should also add that there is a bearish MACD cross on the daily so this favors a stronger correction coming sooner or later.

Looking at the longer term chart, the original targets I had earlier in the year have been technically satisfied (those target price labels have been there for months) so whether or not the 5th wave is over or we're just seeing the beginning of it, odds are a multi-month correction is coming according this count. With that said, if I break down the "stand alone W3" and pick what I see as W1 then the projection is 1810-15 and if I add W1 points (66) to the low yesterday we get 1812. So I am paying extra attention to the coming bearish wave and the 1752-55 level.

On my trades, I picked up VXX again yesterday and I am holding it along with my longs and until I see a firmer trend confirmation I will continue this hedge.

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. 

Beginning of multi-month correction?

The Rising Wedge was completed today with a slightly higher high but not an all time high on the SP500 (The DOW put in an all time high). And this could possibly be signalling the end of the rally for this year. The only thing that could favor the bullish side is if the market is actually putting in an ABC move for its W4 (the one I have at 1752) so we have to see if the wave I have labeled as a bearish W3 continues or we see a sudden bullish reversal.

I was going to buy back VXX at a new all time high for the SP500 and the index came within less than 1 point of that. But since it reversed, I ended up backing back at the break of the Rising Wedge which still made it a profitable move. So now we'll see if the TA turns red tomorrow so I can better project downside targets.

Short Term Trend = Neautral Leaning 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. 

Rising Wedge?

The market came within couple of points of making a new all time high on the SP500 but then retreated quite a bit and now it looks like there is a chance a Rising Wedge or an Ending Diagonal (in Elliott Wave terms) might be playing out, which would support a 5th wave in the count. If the pattern does turn out to be a rising wedge then the new high might just be marginally higher (if W5=W1 then 1780) and we will then see a correction. I will buy back the VXX at a new high hopefully.

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. 

Break out coming?

The market gapped down in the morning today but it failed to put in a lower low and instead put in the right shoulder for the IHS I wrote about yesterday. Obviously this pattern can fail but looking at the number of successful IHS this year, odds favor a break out as soon as tomorrow and the target is 1785 as I mentioned yesterday. However, looking at the micro waves I have 1790-1800 as a target so don't be surprised if we get another all time high this week.

I sold the VXX hedge given the bullish pattern so will be buying back if the pattern plays out as expected as that should complete the entire structure from 1646.

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 moved up a bit today but not enough to give us an idea of what will come next. I had been expecting a W4 correction and this is looking like one but the lack of selling might mean we will see just a correction in time and not much in price. I see a potential for an IHS that targets 1785, if a lower low is not made in the next few sessions then we will see another all time high fairly soon. I will continue to hold both of my positions until I see a definitely break either way.

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 correction continued today and the market put in a lower low, so perhaps the market is getting closer to a bottom and a stronger rebound. Ideally, I'd like to see 1740 tested but since this is a profit taking "sell off", downside might be limited given all the bullishness in the market. Hard to say without a good a proportionate count in place, so I am staying put with both my longs and my VXX position until I see a clearer picture. As it is, I welcome more upside or downside as I am confident I will exit both positions profitably. It is already November (this year flew by!) and given how much the market has rallied already this year, I wonder if there will be a Santa rally this year, that would probably put the market at 1800+ .

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.