Wednesday, February 5, 2014

Market Update

The market put in a lower low as expected and we could have the bearish 5th wave completed at 1737. Which is a bit short of the target I posted yesterday (1732) and still somewhat far from the 200 DMA level at 1709. The ISM report came in stronger than expected so there isn't really much of an excuse to sell,  I think we'll know for sure in the next couple of session if we have a temporary bottom. Assuming the low today is the end of the bearish 5 wave count, the market should be working on a counter rally and an important area to keep an eye on is 1768-1772 which is about a 50% fib retracement and where the Trend Average currently is. However, the micro count on the wave from 1737 to 1755 could be part of a 5 count and if that's the case, I have 1785 as the target. I ended up buying XIV (a lot lower than what I sold it just 2 days ago) and I will have my stop on this trade at 1737. I'll probably get VXX at resistance but it all depends on how the market handles these levels.

Fundamentally speaking, the market has what it needs to mount a strong rally as the data today reinforces the underlying strength of the economy. But I am sure there will be another excuse to sell eventually. 

Short Term Trend = Bearish
Medium Term Trend = Bearish
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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