S&P500 29.6% 2013 Return

What a year! It seems like it was just yesterday that I was writing about the potential start of LT Int W3 when Joe Biden came up with a solution to the Fiscal Cliff last December 31st. The S&P 500 logged a 29.6% or almost 400 point gain for the year and exceeded even my own bullish count or any other that I saw at that time for that matter. Historically speaking, the year after such big gain tends to be one of consolidation so  I am not expecting another 30% year in 2014 (Another 30% run would put the SP500 at 2400). However, there is a clear possibility that the LT Int W3 is extending and should the LT Int W4 be a somewhat shallow correction, then that crazy 2400 level might become a reality. Also, let's not forget that from a purely technical perspective, we have a multi-year Right Angled Descending Broadening formation that targets 2484. A pattern which was put to the test just less than two weeks ago when QE Taper was announced and which just so happened to test 1850 late today as predicted on that day.

"I see a Right Angled Descending Broadening formation. Basically, it's an inverted Ascending Triangle and the target is 1850 should the market break the 1813 resistance."

It goes without saying that if we were to reach that level in a short period of time we will see a big correction as our GDP growth doesn't justify such huge run up in prices in such short amount of time. So my basic strategy will continue to long the market per trend indicators and hedge accordingly when I see completed structures. This method worked well for me this year, my problem was using the wrong longs as they were focused in China but I will switch the short term longs to the US. Last but not least, as we enter 2014, GDP growth is running at 4% and like I said last year as long as the economy continues to grow and we do not go into a recession, the path of least resistance is up.


I hope we find ourselves 30% Happier, Healthier and Wealthier next Dec 31st :) Happy New Year!


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 continued its "correction" and it seems ready to challenge 1850 so we might see another bullish wave to a new high starting tomorrow right or on Thursday to celebrate the New Year. Whatever the case, I expect a real correction after the current wave from the 1768 is done. My guess is we might revisit the 50 DMA again on the next pullback, we'll just need some catalyst to bring back the bears.

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

Another day, another all time high. The question is when will this all stop and what kind of a correction the market will get when the Santa period is over. Unlike last year, the market is going into the new year in a prolonged rally and not a correction. So January might be the start of a stronger correction and perhaps the LT Int W4 I was looking for when the market topped at 1813 will finally show up. If the correction doesn't come in January but keeps rallying then bears might just have to wait until Spring for the real correction to start as that would mean people are just chasing returns and are afraid to miss out on gains. Which is a recipe for a big sell off, so the sooner  a healthy correction comes the better for the market.  At this point, the market is starting to get expensive and another 20% upside would officially place the market in bubble territory, specially without a good correction. One fundamental indicator I follow is the Market Cap to GDP and should the market go to 1.5 (On the chart) then that will be the time to short the market or go into bonds/cash. Perhaps we'll see the market match its previous peak in 2000 at the end of LT Int W5? At that point bears will finally be right but most won't have money to short.

I am keeping my short and long positions until I see profitable exits, which might come as soon as next week hopefully.

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. 

Relentless Rally

This final rally of the year is probably the strongest one I've seen since January as there are essentially no retraces at all, just a straight up rally as if taper news was the best thing that could have happened to the stock market. The Right Angled Descending Broadening formation target of 1850 has almost been met and I have little doubt the market will make it there before any significant correction. What I wonder is whatever happened to the W4, at this point I am not even sure it's coming at all. I am holding on to my VXX and my longs in the meantime.

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. 

 

Merry Christmas

The market did not top on a W3 as I was expecting but decided to continue to rally so we'll see if the market takes a break on Thursday. The daily MACD has gone positive so we might see bullishness carry into the new year before any significant correction.  On a different note I was finally able to enroll for healthcare last night so I can have a peaceful holiday.

Merry 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

I've spent a considerable amount of time trying to sign up for insurance today so I am not very happy with Obama right now. Unfortunately, I am one of those people who are a "small percentage" in the President's own words that had health insurance cancelled due to his stupid law and now I have to pay twice as much of what I was previously paying. But the main problem is I can't even sign up! I've been clicking on the submit button over and over since this morning to enroll and the website keeps timing out. And if I don't enroll by midnight then me and my family won't have insurance come Jan 1st and will have to wait until February. Ironic how "universal care" is making me and my family go uninsured. I don't understand why couldn't he just keep his promise on not messing with people's insurance.

Anyway, enough of my rant.. the market continued its bull run today and made another all time high that I think could be the top of the 3rd wave. So the market might correct and test the 1818 level before forming another base to rally from and go for 1850. The TA is not even in the 1800's and I doubt it will be tested until January but nonetheless I got a signal to buy VXX for the minor correction so we'll see how that goes.

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

The market staged a break out of the Broadening Triangle and so far it looks like a stand alone W3, so the rally could continue early next week with a minor correction or no correction at all. We've seen several of these waves before and it's best to just ride them and avoid shorting them prematurely, specially since Christmas is next week. This move signals the 5th wave of LT W3 is extending and as I said previously, it will be hard to pin point where this will end. But it will eventually turn and I will be getting ready for it and hopefully we'll be able to call the trend change at that time. I know some of you have gotten caught off guard by the rally and I hope you will get a chance to re-adjust your positions. I obviously enjoy making counter trend calls as well as trading them but I am always extra cautious with these counter trend trades, so I urge the same for everyone else contemplating shorting at this time. Short term trading is like boxing, you need to have a good attack plan but an even better defense strategy, never get caught off guard.

Anyway, I am just riding the longs I have (which are not doing that well this past week since they are China related) but I am planning to start switching to ZIV (XIV's cousin) for short term long positions in the future and will develop a hedge strategy with VXX. So I will probably focus a lot of just volatility trading in the next few months.  I can't seem to stop trading these things for some reason..lol

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 spent most of the day consolidating its gains from yesterday's rally and it looks like it is preparing to break resistance. However, until that happens we just have to wait and see so I am still waiting before I start labeling the waves. I ended up selling my VXX again for a small profit and I am waiting for the next set up to go in long or hedge. I'd like to see the TA tested and see how the market handles the pullback, if the TA holds it will be very likely that we get a Santa Rally. I already have about half of my fence paid off so just need the market to cooperate a little more.

On a side note, something very important for the economy that might have been missed among the main headlines of taper is the Feds willingness to keep interest rates near zero. This encourages spending and keeps debt costs low for companies, a formula that has worked very well since the financial crisis. Obviously, the risk is we might see asset bubbles by keeping this policy but that's something another Fed Chairman will have to deal with down the road. I know some people dislike Bernanke's policies but I for one am thankful he was in charge when the financial crisis occurred as I think he implemented a policy that saved the country from a very long recession/depression. That and the fact that I have a 3.5% 30 year mortgage and couple of 0% loans floating around thanks to his vision. So I wish the man well in his future endeavours and hope Yellen will do just as well.

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. 

Taper is good!

If there was any doubt speculative news are used as excuses to move the market, today's move should leave no doubt. Looking at that ridiculously bullish wave in the last couple of hours of today's session, one would think the Fed decided to announce a surprise QE5 as a Christmas gift. But then Bernanke announced what the financial mainstream media was most afraid of, the beginning of the end of QE3 and the market loved it. The market knew what it wanted to do since it started correcting 3 weeks ago but people needed an excuse to rationalize the correction. The real reason was the market running out of waves but normal people don't know that :)

And now that we got this bullish wave from the 50 DMA, I see a Right Angled Descending Broadening formation. Basically, it's an inverted Ascending Triangle and the target is 1850 should the market break the 1813 resistance. The odds of a bullish break out is about 60% so this pattern favors the bulls. However, there is also the possibility of a bearish reversal out of this pattern but the odds are about 20%. From the wave perspective, the bounce from the initial 50 DMA test are a mess so I'll try to label them once I get a better idea of what to label this new bullish wave. So far it looks too bullish to be a C wave so it might end up being a W1 or a Stand Alone W3(which implies a sideways correction before impulsing much higher). Also, the Trend Avg was reversed today to the bullish side given how high the market closed so it looks like Santa might be coming after all.

I ended up going long at support through XIV and was comfortably ahead at the time of the announcement. However, that initial reaction ran through my stop at break even so I made no money despite being right. Had it not done that, XIV would have paid for my fence and more by EOD..lol I did however make some Starbucks money using VXX on the short side and then I bought VXX again at the close and I'm now hedging my long position taken last week. So I am hoping for a test of the TA but not really counting on it at this point, so anything less than a strong sell off and I will be taking profit (hopefully).  If the market continues to run, it will mean the LT W3 is continuing and extensions are very hard to predict so I am going with the TA until I see another top..

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 TA test?

One thing I forgot to add yesterday was the possibility of the corrective wave that showed up today being a B wave, so we have to keep an eye on another high and then the possible scenarios I posted yesterday. It would have been better if the wave from yesterday finished a 5 count but instead it put in a zig zag to higher low at 1777 and if the labels I put on are correct, we should see a bullish wave to 1797. Whether or not the market will be able to stay above the TA is another question, we'll just have to wait and see. I didn't trade today as I am looking for a set up, if we get close to 1797 or if support gets tested again then I'll initiate positions. Christmas is coming soon but Santa might not be coming this year if the market fails to gain bullish traction in the next few sessions.

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 Test

On Friday I posted the market could be in a Triple Bottom Reversal set up or a consolidating Bearish Triangle that would bring another leg to the 50 DMA and today we got both of them today. The market broke out of its triangle in pre-market by as much as -14 points and then it magically bounced right off the 50 DMA and rallied hard from there to test the Trend Average at 1791. With the counter rally today to the TA, both IHS and TBR targets were met and the market could technically start dropping again as soon as manana. But I am going to assume there is a 5 wave count on the cash market with another high to come before seeing the bearish response, so I labeled the low today as the a W4 and we will get an idea if this correction will continue on the coming wave. If I assume the wave from 1810 to the 50 DMA (counting pre-market levels) is W1 of W3 then we're looking at 1680 more or less (or basically a test of the 200 DMA) for a complete 5 wave count. If we get anything less than a strong sell off after this wave tops, then we could be seeing an X wave of a complex correction or a W2 of a bullish count that is going way past the all time high. I put up the long term count so we can see where the market is at and how this is all fitting the bigger picture. If that count is correct, we should see a deeper correction but even if we don't get a stronger W4 one thing the count has right about are the turning points labeled in the spring. Call it coincidence, magic or voodoo but this chart has been very profitable so far.

I executed my trading plan at the test the TA, so I sold XIV, bought back VXX but then sold it to take profits (Surprisingly,  I made more money on the VXX I bought in the morning than the XIV from last week ). Not quite enough to pay for the fence just yet but making good progress. I am assuming the market has another bullish leg left so I will be buying back VXX then. And btw, the fed meeting, taper talk, etc. is just noise. Look at where the market is relative to the TA, that's all we really need to focus on.

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. 

Triple Bottom Reversal or Triangle?

The market did not rally today as I was expecting and instead tested the low from yesterday twice before closing the day in a neutral position. However, the test of the lows were higher than yesterday's by a thin margin which means the count to the Trend Average is still valid and in play. Looking at the pattern, there is a potential for a Triple Bottom Reversal which calls for a bullish Monday. At the same time one could make the case for a triangle that implies another leg down to test the 50 DMA. I lean towards a counter rally since I see enough waves to call the entire structure completed and that is how I am trading it. So I am holding on to my XIV and my other short term positions. The whole taper thing is just an excuse so it will be thrown around next week as the reason for market moves, not that it is the real reason imo since taper in itself is a sign the economy has gained enough traction to be taken off support. But markets need excuses and this is the only one they can think of for now to scare off people and get the bears excited only to trap them again. When you see the likes of Doug Kass, Prechter, Marc Faber or one of those always bearish "experts" on the media telling people why the world sucks then we'll know the bottom has been reached.. works like clockwork.

Have a great weekend! 

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. 

Counter Rally to Trend Average

The market put in a lower low today which I have now labeled an extended 5th and the bounce so far could be labeled an W1-2 or an A-B, which calls for another bullish wave as soon as tomorrow to target the Trend Avg which is now at 1794. There is also the Inverse Head and Shoulders set up that targets 1791 and once the market gets there we should not if this will end up being a complex correction with another  zig zag to come or if it's a W2 of a W3 with the bulk of the selling about to come. Whatever the case, I'll get a better idea by seeing on the market deals with the TA. Last but not least, the lower low today could be the head of an IHS and that would call for a rally all the way up to 1810 again so don't be caught by surprise if that happens.

I couldn't resist the lower low today so I ended up buying XIV to complement my previously long position. Once we get to resistance, I'll be switching sides again. Volatility is going to pay for the fence I am currently building in front of my house :)

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 back to bearish

The market's true intentions were clear today as it sliced right through support without blinking despite "good" news about a budget compromise. The market has now been in an correction for the last couple of weeks but it still doesn't seem long enough to be the higher degree W4 my long term count is looking for, so my assumption is the market will continue to correct in time or in price. At the same time, this could be a "flat" correction of a lesser degree W4 so another W5 from here would not be all that surprising. Whatever the case, the market is correcting and working out the overbought condition from rallying almost all year and these moves are normal and expected. I am watching how 1779 holds but even if that were to break, there are several layers of support from the 1745 level (including the 50 DMA at 1758), which btw coincides with the still viable larger Head and Shoulder target. Lastly, today's move was so abrupt that it managed to reverse the short term trend back to red with just today's close. So now the ball is officially back in the bear court.

I sold my VXX position right at support (1780) and I will buy it back on the bounce or test of the Trend Average. Obviously, if the market puts in some sort of bullish engulfing pattern I will just stay with the longs I bought couple of days ago. Too bad that bullish wave made it 1 point higher than resistance on Tuesday as that is what prompted me to hedge, ideally I would have gone long today when I sold the VXX just as I did last week. You can't win them all.


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

We finally got a bearish wave today but it bounced right off the Trend Average and failure to make a significant lower low tomorrow will bring back the momentum back to the bullish side. Also, one could argue for a bigger IHS forming that targets 1845 so we'll have to keep an eye for key resistance levels and see which one breaks decisively first. The upside level is 1813 and on the downside is 1800-1802. In the meantime I am still hedged but will get out of VXX should the market not go down decisively tomorrow and close under the TA, I will just buy it back later when the picture is more clear and hopefully at a lower price.

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 signal back to green

The resistance level I mentioned last week was challenged and broken by just a point today but the lack of a bearish wave has returned the short term trend signal back to bullish. This TA signal has only been whipsawed once this year so now we have to see if the market will hold above the Trend Average on the correction or slice through it. I ended up buying back my longs when resistance broke so now I am hedged and will be selling one of the positions depending on how the market handles the TA. I am still hoping for a bigger correction and technically speaking we could see a nasty sell off wave this week but you guys know I respect the TA so I am turning cautious on my short term bearish inclination.

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. 

1808-1810 Resistance

The market put in the wave to challenge the Trend Average as I had been expecting but we now have to see if this is just a completed B/W2 wave with a bearish C/W3 coming as soon as Monday or this is part of a 5 wave impulse. As I mentioned earlier in the week, there is that Inverse Head and Shoulders potential and this pattern targets 1820, which is about the same target I have if I were to count the wave from the 1779 low as a bullish 5 wave count. I think the key to this move will be the 1808-10 resistance level, if the market manages to break that resistance then the IHS is highly likely but if that level holds then I am expecting the 1779 level to be challenged at the very least. As it is, we have the larger Head and Shoulders with a 1743 target and the market bouncing off after 4 days of selling.  The ST  bearish confirmation signal is now being challenged so if the market is indeed planning to go down, we should see the market close under the TA again and stay underneath it. I 'd be somewhat surprised if the bigger correction ended already but one has to be open minded and ready to act on what the chart is telling us.

 I find it almost funny how the taper talk is being used to sell or buy like in the case today. First, it was taper was bad for stocks but somehow today it meant that the economy is recovering so taper doesn't matter anymore! I haven't talked much about QE but basically my take has always been that QE basically saved the economy from a Japan style deflationary recession/depression. I think of QE as a loan to a business that is having a hard time, if the business can regain its footing and be profitable again then the loan did its work. And the US government is no different, it is a business! the difference is the government gets its revenue from Tax payers and it is in the government's best interest to make sure we can be productive again to pay more taxes. And what better way to do that than by giving consumers ridiculously low interest rates so we can buy lots of stuff using essentially free money and lower the cost of corporate debt so profits are maximized (so the gov can tax more of it)! This was the vision of Bernanke and it has worked very well so far and as long as business is good, the markets will keep going up and up! this is not about QE, it is about the economy gaining growth momentum.

Anyway, I sold my longs at 1800 and bought back VXX so I am back to a bearish position. This was a good week to trade for me so we'll see if the streak goes on.

Have a great weekend!

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. 

Short Term Trend is confirmed bearish

The market retraced a good portion of the bounce yesterday and one could make an argument for the Inverse Head and Shoulders I mentioned yesterday as a possibility. However, I am labeling the retrace today a B Zig Zag with a bullish wave to come as soon as tomorrow to challenge the 1800 level/Trend Avg. If we add the length of A to the low today, we get that challenge to 1800 (1803 to be precise). Alternatively, the market could be triangulating in another bearish W4, which would imply one more lower low before making a bounce to challenge the TA. I was very tempted to sell my longs but I am holding until we get a TA test. Last but not least, the Short Term trend has turned red so it's time for bears to make their case. We haven't had a bearish ST signal since September and this proves again that wave counts can actually predict correction. I am adding again the LT chart I posted in May when I was then calling for a top at 1650.. the odds of this being a W4 to fit the chart are astronomical if these were random guesses.

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. 

Another Head and Shoulders in the works?

The market was very volatile today but we got that 5th wave I was talking about and I now see a complete 5 wave count. The bounce from the low could possibly form a right shoulder for a bigger Head and Shoulders that targets 1743, so I will be watching 1802 very closely as that area will be the key for the next big move. At the same time, there is the potential for an IHS but it's too early to tell. I am assuming this completed 5 wave is either an A or an W1 with more downside to come. The Trend Average is still rising despite today's lower low but if we get another close under the TA tomorrow the trend will likely turn bearish. The last option, which I don't think looks likely (but one never knows for sure) is that these 5 waves are part of another W4 correction, similar to several W4's we've seen this year. If that is the case then we should see the IHS form and have enough notice to position ourselves accordingly.

I couldn't resist today and sold all the VXX at my target and bought longs for the bounce. If we get to that 1802 level, I will be locking in profits and buying back the VXX. But in the meantime, I have set my stops on the longs to break even as I am comfortable ahead. Who said the markets couldn't be possibly timed :)


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. 

Close under TA

The market followed through on the Head and Shoulders set up and its target was met today and some. This is the first close under the Trend Average in almost one month so this might be the start of the correction I've been talking about. The short term trend has not been bearish since September and it remains to be seen if the market will make a turn this time. I'll start looking at potential correction targets once we get a change of trend confirmation to keep it simple. The low for today was 1787 and very close to the 1785 projection I had yesterday so I could technically label 5 waves completed on the micro count. However, the wave today was so steep that I will assume it was just the W3 that ended at 1787 with a zig zag move to 1795 being a W4. Therefore, I am looking for another leg down to put in a lower low for what could be either an A or a W1. If that is the right count then we might see a bigger Head and Shoulders forming with a strong bounce  coming to form the right shoulder before a bigger sell off.

I am sticking to my plans so I haven't touched the VXX position as tempting as it was today. But if we do get another leg down I might not be able to help myself. Maybe I'll sell half or buy a long position for the bounce.. we'll see.

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. 

Trend Average Test

The market finally tested the Trend Average today and we now have to see if there will be a bounce or follow though selling to start changing the short term trend. There is an obvious Head and Shoulders set up targeting 1791 and my early micro waves projections have 1785 as a target if the selling today is part of a bearish 5 wave count. Obviously, if the market stages a rally then we'll see have to keep extending the 5th wave but it is time for a correction.

My VXX position is looking good and under normal circumstances I would have taken half the profit today at the TA test but I am looking for a change of trend to maximize my return. But if I am wrong on a correction then my stops are at break even so no loss there.


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 got sidetracked by the holidays so didn't have the chance to post. But basically, the rectangle move was a micro w4 consolidation so I am still waiting for the market to start a stronger correction. The TA is almost at 1800, which is almost unimaginable if you think about where the market was last year but at the same time this was been a Long Term W3 all along so in that sense it is no surprise and next year we'll probably see SP2000+ and bears will be pulling their hair out. My VXX is profitable so I will probably set my stop to break even and continue riding it if the market finds a top.

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.