Thursday, April 10, 2014

Market Sell Off

The market got pummeled today, specially the NASDAQ which ended up down 3%. I was looking closely at the 50 Day Moving Average for the SP500 but that was lost as well so the picture is clearly bearish at this point. I was originally looking for yesterday's wave to reach the 1874-84 area but it felt short in the cash market. I had originally labeled that wave a B or a W2  so the current wave should tell us if we have seen the top for the next few months or if the market will stage a late surprise and reclaim its bullish momentum. The ideal target for the C wave is 1812 (which implies a correction and a resumption of the bullish trend) but it can be 1.618 of A so 1775. If this is a W3 then a 5 wave count should reach 1740-50 on the "conservative" side. As it stands, I see a Head and Shoulders targeting 1780 and 200 Day Moving Average at 1760 which should be a magnet for both short sellers and bullish buyers. These targets are all likely as long as the market is prevented from recapturing the 50 Day Moving Average. The only thing that I see as bullish is the permadoomster Marc Faber babbling today about how 2014 will be worst than 1987.. this from the man who was "100% sure" of a global recession in 2013 and pretty much every single year before that.. Now, if Robert Prechter from EWI gets any media time, then you know we have bottomed.. lol.

The market was not so kind to me as to allow me to buy VXX by reaching my original target but it's ok. I did manage to make some money for my coffee fund buying XIV at the 50 DMA and selling it on the small bounce (+27/-6). I am on the sidelines except for my ST and LT China positions, which actually have been doing well. But I will attempt to catch a bounce at the levels I mentioned by buying XIV again.

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.

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