RUT - Interim Top?

The RUT probably put in an interim top today at the 1.618 extension. I'm waiting for that daily ADX to roll for a sell signal however.

***Long AUD/NZD @ 1.06630***

I'm thinking we'll have another bounce in this pair either up to the 1.11 level or possibly the 1.138 level, which would be a 400+ pip rise or a 700+ pip rise. Pips are worth slightly less than $10 in this pair coming in at $8.39 per lot.

The risk on this pair is the prior low at 1.04903, but I never set my stop at the ultimate low. I'd rather save a little cash if I'm wrong and set it at 1.05, which is 163 pips below the entry. That risk is a little large, but if this trade plays the reward could be much greater than the posted take profit levels above. Sometimes I'm willing to risk a little more on these scenarios.

Chart:

One of my favorite buy/sell setups occurred on this pair. On the 30m chart you draw a trendline on the MACD. Once that trendline is broken you wait.......You wait for the pair to put in either a higher high or lower low WITH Divergence. Right now I'm jumping the gun on the divergence, but you can see on the chart that the MACD would need to drop sharply to not create that positive div. I'll gamble on the +div.

Risk: 163, Reward: 400 (on the low side) = .4075 as I said, not my best setup, but I'll try it.

USD/JPY Currently Long

I am currently long USD/JPY and have two options on the charts, both of which are bullish.

The first chart shows the A wave up, followed by a B wave, then a series of 1,2's up. This count is more bullish, but I still don't expect the pair to trade a new high over the January 2nd high.

Chart:

The second more probable scenario is an A wave up and we're currently in a B wave triangle.

That would take us to the 102.60 area. I have my stop-loss set at 101.50 because forex has a tendency to over-run the C wave low a touch on triangles.

Cycle Chart Referenced in Previous Post

The SP-500, 1987 Projection Line and Monthly ADX

In the past the ADX has given early warning to extended market crashes. This time I don't expect it to act differently. 

In the chart above the Monthly ADX dropped below 40, or 35 in the case of 2007, prior to the final highs being achieved. When the monthly ADX gets above 35, only a close below 35 will issue a buy or sell signal. Once the ADX gets over the 40 mark, the 40 line becomes the buy or sell signal. Using this indicator on a longer term basis, while also following the weekly, daily and sometimes hourly indicators should keep me on the right side of the trend. Once the market broke above the upper red break line and the white 1982 projection line I knew it was targeting the 1987 projection, and this line only rises as time goes by.

In the chart above you can also see the markets reactions to previous trend lines. The market found it's 2007 high at the 1987 projection. It found it's 2002, 2010 and 2011 lows at the 1990 uptrend line. It found it's low in 2009 at the 1982 uptrend line. Once the market broke above the upper red break line and the white 1982 projection line I knew it was targeting the 1987 projection, and this line only rises as time goes by.

I am looking for the completion of the iii of 3 wave and I have a few cycle thoughts on that timeframe. The first comes from the equinox chart that shows market turns occur near the Spring and Autumn Equinoxes.

the Spring Equinox is March 20th, 2014. The VIX Cycle low is showing up March 10th, 2014. The 24th TD from the Q's low is March 11th, 2014. All these time signatures are aligning for something, what could it be? I'll keep you posted, but the charts ARE NOT reflecting a MAJOR decline at this time. I'll be looking for a drop to 1600 by July, 2014.

SP-500 Update/Some Caution from Indicators

There are a couple of indicators showing caution on the daily SP-500 Chart.

The MACD is running into the down-trend line currently - Just something to watch for now

The RSI is over the 85 mark, which has produced both large and small pullbacks on previous occurrences.

The StochRSI is testing it's up-trend line. This happens often during an uptrend where it will give us a new up-trend line once the previous is broken. Nothing to be overly concerned about just yet.

The daily indicators are still on buy/uptrend, but these are just a few charts to watch in the coming sessions.

The VIX cycle is due to make it's low on March 10th, but since the last high came in early, we can assume the next low may come in early. The shift from High to Low moves a possible VIX low into tomorrow, February 27th. I will be watching for a reversal from tomorrow into March 10th with help from the daily indicators.

***SOLD URZ***

Bought December 2013 @ 1.14 sold today 1.76/1.77

54% gain.

*** SOLD LNKD CALLS***

Sold the LNKD calls I bought on 2/12 around $8.00 for $18+ today. Gains of over 125%

Each $800 invested turned into $1800

Chart:

TSLA Update

Per the previous chart, I had TSLA in wave iii of 5. If wave iii extends 2.618*i it puts wave iii at 260ish, which it traded at this morning. So From here I am looking for a retrace down to 230 which is .236*wave iii and 1.00* wave ii, or, more likely, 212 which is .382*iii and 1.618*ii.

Weekly Chart:

Daily Chart:

The v of 5 should target 320-340.

AAPL Puts - April 520's in the $14.00 Area

I've been picking up some April 520's on AAPL. Stop-loss @ 552 take profit 460-430

Chart:

TSLA Weekly

Q's & SP-500

If the 5th wave in the Q's chooses to run to .382(1+3) and 1.00*1 up at 93.75 that would be a 3.5% rise from today. If the SP-500 traded in tandem @ 1:1, so a rise of 3.5%, it would put the SP-500 at 1914.75, which is very close to 1920 I've been looking for.

It's a New Week

The updates to the blog are right below the headline (right above this post) and to the right of this post. It is the current market call, which today is still long. These two areas show my current holding status.

These won't change daily, they are meant to keep us on the correct side of the trend, and right now the trend is still up.

QQQ - Tracking the High

I'm looking for the completion of the five wave sequence higher in QQQ. Here is the current updated chart that shows we are in the 5th wave higher. It also shows the FRZ (Fibonacci Resistance Zones) of wave 5 versus the previous subwaves. I can't remember having a scenario like this where nearly all the fib's of the 1st wave and waves 1-3 line up at nearly every level. The only fib resistance level where they are not in sync is where wave 5 would equal .50 (1+3).

All of these fib confluences are valid for reversal zones, which makes shorting this move even harder than usual.

The Chart:

We are currently at wave 5 = .618*1 and wave 5 = .236 (1+3), which isn't a very common Fib Confluence for the market to stop at. The more common occurrences happen when wave 5 is either equal to wave 1 or wave 5 = 1.618*1. The common fib for wave 5 vs. waves 1+3 is .382.

We can see from the chart that the next FRZ is the 93.85 level and that is precisely where wave 5 = wave 1 and wave 5 = .382 (1+3). I would expect a ton of resistance at this level and will most likely enter the first long-term scale short there.

Where we came from:

I have wave 1 of this move kicking off from 66.88 going up to 74.95 = 8.07 pts.

Wave 2 - 74.95 to 69.15 - 5.8 pts retracing wave 1 71.8% which is a little deep for a second wave

Wave 3 - 69.15 to 87.90 - 18.75 pts extending wave 1 232% which is typical of 3rd waves. We want to see the 3rd wave extend anywhere from 161.8% to 261.8% on these larger timeframes.

Wave 4 - 87.90 to 83.74 - 4.16 pts. retracing wave 3 22.18% which is very close to .236 fib and it retraced to the prior 4th wave at 84.05. We also measure wave 4's against wave 2's. It retraced nearly 72% of wave 2, which is typical.

Wave 5 - 83.74 - ???????? I'll be looking for 91.81-93.98 based off the fib confluences. 91.81 would hit the upper green trend channel on Wednesday, February 26th.

Time:

Wave 1 About 24 TD's
Wave 2 About 24 TD's
Wave 3 About 133 TD's
Wave 4 About 26 TD's

We see that waves 1,2 and 4 are very similar in duration. As of the close today, wave 5 is only 11 TD's.

We would expect wave 5 to be at LEAST half of wave 1, preferably closer to the 24 TD's of wave 1.
12 TD's would be tomorrow and half wave 1
15 TD's would be Wednesday, February 26th, where the top of the trend channel comes into play with the FRZ and .618 TD's of wave 1.
24 TD's would put the top into March, and would probably be more toward the 1.618*1 FRZ, but that would be above the trend channel and unlikely.

DJIA and Gold

This chart is suggesting we should be long Gold and short the DJIA

Notice the bearish divergences on the latest high and the RSI and MACD uptrend lines have both broken.

We'll count this as a 12345 up and an A down. The move up should be a B wave and we should have a C wave down to the 10.50 area.

RUT & DJIA

The Russell 2000 and the DJIA have been the two weakest indices on this rise, so those are the indices we want to be short.

LNKD - Buying small amount of March 200 calls

I'm entering into a small order of LNKD March 22 200 calls for 7.50-8.00

Here's the previous chart from last October:

It is now near the 192 level and near the white parallel channel line.

QQQ - The Count I've Been Tracking

Wave 4 retraced exactly 23.6% of wave 3. I thought it would drop a little more to the 81 area, but alas it did not. The targets for wave 5 are within the two white horizontal lines. Now that wave 4 is presumably in, I can better get a feel for where wave 5 will end up.

The FRZ's for wave 5 now reside at right around 90.00 where wave 5 = .618*1 and 5 = .236(1+3) and the 93.60 area where wave 5  = 1 and wave = .382(1+3). I would give better odds to the second FRZ holding the move.

The SP-500 might make new highs with the Q's, but I don't believe the DJIA will.

The High of this move

The high of this move, assuming it is a correction higher, should come between tomorrow, February 11th and Tuesday, February 12th from SPX 1800-1830.

I'll be looking to get short again in that range, during that timeframe.

VXX Puts, Swing Trend Indicator and Daily Indicators

I should've held onto those VXX puts. Oh well, book profit when it's there.

The Swing Trend Indicator has given a tentative buy signal:

All daily indicators are now on BUY signals. Only an intra-day reversal will change them back to sell.

What happened today?

Today was a decent addition to the kickoff move, but it wasn't enough. I trust my market intuition probably more than I should, but something seemed wrong with this move so I took profit on my QQQ calls and VXX puts.

These results weren't spectacular, but they were wins, and that's what I try to focus on. Good setups where the risk is about .20 the reward. When you keep your risk/reward ratio low, even hitting 50% makes you money. I call these setups ELLIOTT HEDGED and I TRY to focus on these setups.

Why did I take these trades?

EW Theory along with short term indicators said it was time to take long positions on the market, even though the daily signals are still saying stay short. This could be a counter-trend rally vs. the ultimate downtrend, and today's action actually suggested that to me so I took profit. What's nice about getting quick, high returns is I can still get back in for an uptrend and make money without feeling like I'm chasing.

1. Volatility failed to produce a new high when the SP-500 produced a new low.
2. Sentiment, even on a short term basis, was heavily favored to more volatility. You can see this by just using the ATR (average true range) on index charts. There's no need to pay for sentiment indicators when you can gather the information when reading ATR correctly.
3. Tech has been the strongest index throughout this downtrend. I always want to get long the strongest and short the weakest. The weakest was the DJIA and that proved to be the best short of the main US indices.
4. It felt right. I had laid out my targets and the market actually reacted accordingly. It's not my job to tell the market where to trade, but rather decipher where it does trade. When the market reacts to levels I have highlighted, I listen to it. If it blows right through those levels, I try to figure out what it's thinking. I can't will the market to do what I wish, but I can "feel" if it's abiding.

Which brings me to why I closed my long positions.

I said previously that we got the kickoff move, and today was the follow-through of that move. My analysis and "feel" was correct. Today, I got a different "feeling", but this time it lacks analysis. The only analysis left for this move not to be ultimately bullish are the daily indicators, but even they are close to rolling over. What about the EW count? I came up with a short term bearish count where this is a B wave of a double zig zag. Under that scenario, today was either the top before another move to lower lows, or we'll gain a few more points, then drop. But who cares? Shorts are covered, longs are covered, and I'll wait for a new setup, because that's what I so. I identify great risk/reward setups and trade them.

I will put most of my account long tomorrow, at some point, either chasing or at a new low. I know the cycle high of the VIX is coming next week. A lot of other indicators show that a low (read bottom) is at hand.

Best of luck.

Jim

No VIX Signal

We didn't get the close under 19.11 for the VIX so no buy signal has fired yet. All daily indicators are still on sell. I remain cautiously bullish thinking a low is either at hand or the next move down will produce the low we can buy.

Kickoff Move

This is the type of action we want to see off the bottom. The daily indicators aren't saying bullish life just yet, so we need to pay attention in here. Breaking above the FRZ provided in the chart yesterday is a good bullish sign. Also, a VIX close below 19.11 issues an equity buy signal.

VIX Equity Buy Signal

We have the first two candles needed for the VIX to issue an equity buy signal in place. All that is required now is a VIX close sub 19.11 tomorrow. The previous occasions are marked on the chart with vertical, green lines.

I believe it was KaZoom who first showed me this setup, so thanks go to KaZoom.

Tracking the Low

I have come up with two probable targets to buy in SPY, I will be buying these levels with UPRO.

FRZ = Fib Resistance Zone. The FRZ is showing up as the same place as the 67sma on the 10m chart.

Time To Start Looking For A Low

I believe we should start looking for a low in this timeframe. The VIX Cycle is showing a high near February 12th, but these can come in a little early, which they've done in the past.

The Daily RSI has already given a CIT (Change in Trend) and is currently putting in positive divergence>

The Daily ADX is now in the extended territory where we can buy a rollover.

The SP500:VIX Chart has the RSI already touching the 30 line and now putting in positive divergence.

The rest of the daily indicators remain on sell. I will post an update once they give confirming buy signals.