Friday, December 20, 2013

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

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. 

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