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CURRENT MARKET TREND: Up 5/27/16 @ 2090
Stop-loss 2026






Saturday, December 3, 2011

SP-500

I'm looking for weakness in Cable to get long, just like I'm looking for weakness in the SP-500 index to get long. Daily indicators are still on buy, but when I look at the hourly chart it shows that this move up has either finished or is near completion before a move down.


The chart is showing a completed 5 wave move off the 1160 lows, which means a retrace should be followed by at least one more 5 wave move up, if not more. Just counting 5 waves up doesn't make me bearish, I need to see some confirmations. I'll start with the ADX on the hourly chart.


The circle is showing the hourly ADX has rolled over, indicating the rally is exhausted or near exhaustion. The +DI has also put in a negative divergence to price. Risk takers can short right when the ADX prints a lower high than the previous hours and place a stop at the price high of the high ADX tick. A less risky entry is to wait until the ADX closes below the 40 line. Let's see if there's more confirmations.


The Elliott Wave Oscillator was also showing bearish divergence during the new price highs. So when we put these thoughts together with the Cable charts they seem to be saying near term equity weakness followed by a strong move upward.

AUD/USD is also showing bearish action:

Friday, December 2, 2011

I Hear The Bears Growling, But They Lack The Killer Instinct

I'm actually becoming more bullish by the day. I've seen this play before. P3 Crowd, "It's just another 1-2, the third wave down is coming..wait for it...61 retrace...78 retrace...double top...  It's played out a couple times since the 09 bottom. Maybe it takes a couple falsies before the real happens, but I'm not waiting for that. When volatility gets extreme, as it has of late, it's time to shorten your trading timeframe. I don't know what's coming next, but I have some ideas.

Until the yearly close I won't know what the future years will bring with what a trader can claim as certainty. Certainty for me is conviction of over 51%, and a year end closing level will give me that. Until then, I trade short term until something catches my fancy. For now, I am bullish, save a short term pullback in which I'll buy call options and short the whore known as TVIX.

As of the charts:

Daily Swing: On buy since Monday
Hourly w/ Indicators: Hourly indicators rolled over to sell today = Bearish
EW Count: Wave 3, i or C topped today. Looking for pullback to 1225/30 area for 4, or 1220-1190 area for B or ii. (i,ii) very bullish count, which I'm kinda leaning toward now.
Subjective Personal Thought: If the market is going to put in an elusive P3 it will be to the upside.

Cable - Time to Face My Fear

Cable has a tendency to kick my ass for some reason. I recently went long and was stopped out for a $4K loss only to see it rally a couple hundred pips after I was stopped out. That couple hundred pips would've yielded over $10K. Grrrrr. I've known for awhile not to gamble too much on Cable because it's in a long-term correction. Corrections are probably the hardest patterns to trade because the patterns are always morphing, especially when you're talking about a correction the dates back to 2009. I have been tracking this corrective pattern since early in 2010, and the long term count is still valid. I'll start with the weekly chart so you can see what I've been tracking.


As you can see from the chart, 2009 marked a wave 3 low in Cable and we've been experiencing a corrective wave 4 since. The EW Osc is displaying lower highs and higher lows validating the triangle count. The C wave of the triangle is a double zigzag corrective pattern, a more complex pattern which usually develops in the C or D wave of a corrective triangle. The major ABCD waves thus far break down into 3-3-3-3 structures. If it looks like a triangle, and acts like a triangle....well if it was anything other than Cable I'd say it's a triangle. Damn Cable.

Next we'll zoom in to the daily chart:


This chart shows the D wave low in October followed by the a of E rally. I have the b of E low in place with a 1 of c of E up and finishing off 2 of c of E. From here we could go long with a stop under the D wave low, but that leaves us with a 320 pip stop-loss. Most people don't want to take a 320 pip drawdown before a move up, and nothing is guaranteed. I'll zoom in again and try to get us a better entry.

Finally we'll zoom in to the hourly chart:


Oh Cable, why do you hate me so?? Was this an Expanding Diagonal Triangle for wave 1 of c of E off the b of E wave low. Maybe, and I'm going to play it like it was. The Fibonacci Support Zone lies at 1.55600 where c of 2 of c of E resides. So I have now dropped my stop-loss to 290 pips rather than 320 pips. Not much I know, but it's something. Next support comes in around 1.55300 where prior 4th wave meets with C=1.618*A. Both are good setups. The latter setup will reduce your exposure to -290 pips. These stop-losses are all based off the D wave low, not the b of E wave low. You can further reduce your losses by setting stops at that low and risking 100 pips. There is still a great risk of being wrong, but the fib support zone should at least provide a bounce so we can get out of the trade if it doesn't look like it's going to play nicely.

So, if this trade doesn't work I WILL NEVER PLAY CABLE AGAIN!

To be a successful trader I believe you have to start in the forest and finish at the limb. Starting with a weekly chart and zooming in multiple levels will let you see aspects you may be missing while focusing on minute levels. Always remember there is something bigger.

I hope this helps.

Peace,

Jim Genosky

Thursday, December 1, 2011

The Fate of the US Dollar Index

Geithner finally found a way to officially tank the US dollar with help of the major central banks around the world. Will this be the fate of the US Dollar??? I think it may be.

SP-500

No changes to the chart from yesterday. Support resides at 1230 area for a pullback. The bearish option is the C wave high was today, but full corrective patterns rarely channel as well as the move up has. Therefore, I believe this is either the A wave of an ABC pattern higher, the bullish count pictured in the chart calling it a 123 up thus far, or there also exists a VERY bullish case with the 12 up as pictured, but the 3 or C wave being counted as just wave i of 3. Again, because of the channel I don't believe the third case to be true either. So, by elimination, I believe this is a 5 count A wave for now targeting 1265/70 before a reversal back down to test 1220/30 level again and then higher in the C wave.