Tuesday, December 3, 2013

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. 

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