Mild Correction so far..

The pullback has started but the fact the market has held above the 1325 support level suggests a mild correction so far. I favor a stronger pullback but if we get another few points off tomorrow then the market will have enough strength to break the 1332 resistance and turn the market officially bullish again. Oil is at $106, which weeks ago caused panic. But there is a sense of faith in the markets right now which works for the bullish case. I plan to go long (especially emerging markets) if we get anything less than a big sell off.

Correction or Sell Off?

The market completed the W5 and stopped at the 1332 resistance level mentioned yesterday. And now, we should start seeing the correction (or sell off) starting tomorrow or Friday at the latest. I mentioned earlier this week the 1290 target and that is still a pretty much valid target for this coming bearish wave. And like I said before, if we get corrective zig zag waves then chances are we are going to see new highs for the year. But if we get there in a big sell off, then the bearish case will be reinforced. The TA is currently at 1305 and rising every day so we should see the TA tested at the very least on this pullback.

I sold all my longs at 1331, re-added the short position I covered yesterday and maintaining my original short so I am more than net short at this point.

W5 to 1330

The wave turned out to be a W4 after all and it seems like we're headed towards the 1325 or 1332 before a significant pullback. The volume today was the second lowest this year and this seems to be a window dressing rally. But once the new quarter starts by the end of the week, we should see what the market's intentions really are. I covered the shorts I took at 1318 at a profit but left the 1308 position open as an hedge to my longs. So I'm waiting to see if this has been a sucker rally (from 1250) after all or the start of a new rally to new highs.

Beginning of Sell Off?

The market should start selling off (or correcting) around this time. There is a chance that the mostly sideways action is part of a W4 with a W5 leg coming tomorrow or Wed. However, I doubt any new significant highs will be made until we get at least a correction. So I favor a sell off or correction in the next couple of days to the levels I've mentioned before. The key to the structure will be how the market reacts once we are at these levels. If the market holds at support then there is a good chance the bulls will take aim at a new high for the year. I will be covering my shorts on any reversal against the TA which is currently at 1293. If this is a real sell off I doubt the TA will be re-tested again once the market crosses it.. we shall see.

Bearish Wave to 1290?

The market rallied just like it did in after hours and it stopped at the 1319 resistance and I think we'll see a bearish wave on Monday. I see many people talking about this being a 5th leg to new highs and while this is possible, I wouldn't assume that until the next wave unfolds. We should be able to tell by early next week if this was a counter rally or a the beginning of a new bullish rally. If today was a W3, then the 1300 level should not be violated. I took another short position at 1318 so I am now net short and will be covering when the TA gets tested. I don't know how the market can ignore all the bad news and $105 oil but if it wants to go higher then better prices to sell longs and to short (or preserve cash).

Have a good weekend!

1315 Target has been met.. watch coming bearish wave

The market closed today near 1310 but the 1315 target I posted yesterday has been technically met during after hours trading. I speculated on an Ascending Triangle pattern that completed in the e-minis and we woke up to the trust out of this triangle. And now that the area I had marked as a target has been met and the market is challenging the bearish trendline, I think we could call this enough for a counter rally. Now, what comes next will be the make or break wave for bulls and bears alike. I think we will retrace to test the TA which is currently at 1287 if the bearish wave starts tomorrow. If we get there in a sell off and the 1282 support is broken, then I think there is a good chance we'll see 1220 fairly soon. However, if we get there in corrective waves (zig zag waves), chances are the bottom is in for this correction and we will go on to new highs for the year. I favor the bearish case based on the trendline and the bad fundamentals but I will trade according where the trend takes me. As of today, the TA turned positive and if not reversed soon then the short term will officially turn bullish.

I suspected the high for the rally could be put in after hours so I took a short position at 1308 to hedge. And of course, we might see 1315 or even 1319 in the cash market before reversing but I think we're close enough for the market to start correcting (or selling off).

Possible Ascending Triangle = 1315

The market retraced into what I originally labeled as W1 so that count is out. However, the market continues to point for more upside before any meaningful reversal. Today's bullish reversal from the early sell off is setting off a potential Ascending Triangle targeting 1315, where the gap is. So I expect a bullish end of the week and then we'll see if the past few weeks was a correction or just the first phase of a much larger sell off. I am waiting for further upside before shorting. Also, the TA is turning positive so the market needs to resume selling if the bearish trendline is to continue.