Friday, April 4, 2014

Trend Average Test

The market fell couple of points short of the measured target for the SP500 I had but nonetheless it made an all time high again and now there is a complete 5 wave structure from the 1842 correction low. I normally expect a Trend Average test after 5 waves are completed but the move today to the TA was swift. However, it seems like this particular leg found a bottom at 1863. The ideal correction for a W2 is usually a Zig Zag but obviously anything can happen. So we could either see 1884 challenged before the bearish C leg or the rally could simply resume after today's sell off. I am keeping an eye on how the market closes relative to the TA as the trend needs to be bullish for higher highs to materialize. As it stands, the bullish short term trend is being challenged.

I executed my plan to buy back the VXX I sold yesterday near the high and closed the position profitably at the test of the TA (24/29). I also day traded the pharma stock I sold the other day (25/29) and I bought XIV which I am holding over the weekend. Hopefully, we'll get a strong bounce on Monday to 1884 so I can sell some or all of XIV. However, if today's support is broken on Monday I will probably position trade it/hedge it as 1852-55 would likely be tested.

Have a great weekend!

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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