Sunday, June 30, 2013

06/30/13: Holding short - 1580 then 1635

As we open July 1, I am looking for a dip into 7/2 to 1580  and then a rally into July 8th to 1635.

I'm basing this information on the cycle timing windows.  We just went into a high on the 28th so the next two days I'm looking lower into the July 2nd timing window.

However we have a new moon coming 7/7.  Typically markets have rallied two days before the new moon so I don't see any reason why we won't rally after the low on the 2nd.

Stay nimble, short term trades only.

Thursday, June 27, 2013

06/27/13: Outlook incorrect, holding short however

Limited upside remaining however given how this rally has moved past my timing window, I have no choice but to concede that we would move a little bit higher giving me a bit more "pain" on the shorts and me admitting that the next few days outlook was incorrect

Based on the new information received after this morning's gap...we have several price targets for upside tomorrow:
1.   The 2nd gap at 1590 met its implict price objective: you take the 1560->1590 then double it gives you 1620.

2.   The latest 3rd gap takes this a step further.  This gap was 1605.  1560->1605 = 45 point move so 1605+45 = 1650 is a high upside target.  Realistically it appears that 1635 is achievable (equal length waves 1560->1590 then add 30 points to the 1605 gap = 1635).

3.  Gap is at 1625-1629.  Given the viciousness of the previous move, I am speculating that market participants would find that a prime opportunity to get out of longs.


-  Daily NYMO is hitting the upper BB and is also sporting a fat negative reversal (velocity of momentum oscillator much faster than price...can't continue forever).

-  Hourly OBV is showing we should be back at 1580 because we're back at the declining channel.  Note that I am not SUPER bearish but bearish currently given how at a very basic level, the major moving averages on the hourly and the daily are trending DOWN.  This tells me to take higher risk on the short side, less risk on the long side until the moving averages switch.

Wednesday, June 26, 2013

06/26/13: Re-shorting at 1600-1610

Loaded big shorts with another batch ready just in case we do reach the original target of 1620s.

CORRECTION: I'm starting to believe that we are in wave 2 of the bigger wave C wave rather than starting wave 3 of C.

I am currently looking for a dip down into 1580 then another launch up into 1620-1630.  This would coincide with the declining 200 hour moving average.

So down into end of June and then up into July 3rd, the day before Independence Day.

After that I think that could be the start of wave 3 of C.

We shall see!

Saturday, June 22, 2013

06/22/13: Wave C under way, looking for 1620s to short

Markets didn't quite reach my original target of 1660-1670.  1650s was where all the calculations had pinpointed to but I guess I was wrong in thinking that there would be a stab to get above these resistance levels.

Nevertheless, the market reacted in that zone and is now trading back under 1600 on the SPX.

I got stopped out after markets crossed under 1650 very quickly and switched to a short.  However, I only held that until 1620.  Pretty bad trading on my part since my plan was always that we were completing a wave B and then undergoing a brutal wave C.

Afterwards I started buying to play a bounce but the downdraft was more significant than I originally planned for.

Wave C has been brutal and now I am trying to play the bounce up to the gap zone of 1620s.  There is a legitimate change that the market has temporarily bottomed and is looking to retrace back up to 1620 this week.  On the 10 minute, there is a clear nested IHS built on oversold conditions.  Target is 1620 Monday.

Afterwards, this should reset the short term indicators to overbought but long term oversold.  I am planning to short at the 1620 level (if it can really get there) and ride this wave C down to 1540s.

Monday, June 17, 2013

06/17/13: Maintain 1660-1670 target...late 6/19 - 6/21

The cycles are starting to get a bit clearer for this week.

We are also seeing a lot of resistance lines converging.

-  The channel that is forming currently is pointing towards 1660-1670 by the 20th.
-  This is also the underbelly of the large channel created from the November lows.
-  It is also the underbelly of the broken triangle support line from late May.

Not only that but OBV is at the same level as 1661 thereabouts.

CCI trends seem to top off in the 20th to early 24th timeframe but downside pressure starting to build after that.  It seems that either the top of this B wave is 19th / FOMC day or early 20th.

I will be refraining from shorting until then.  In the meantime, I intend to stay long but will be passing out my longs to complacent bulls in a couple days.

Expect a lot of volatility around FOMC.

Friday, June 14, 2013

06/14/13: Outlook for week of the 17th - 1660 then down

Next week is shaping up to be quite the roller coaster again.  We have the FOMC meeting, housing, along with opex.  If you like to trade volatility, next week should be no different from the past couple of weeks.

Currently, I believe we are still in the middle of intermediate wave iv.  Wave A finished at 1598 and we are in the process of finishing wave B which I believe is targeting somewhere > 1648 (1660-1670) before falling off a cliff the week after.

Monday is looking neutral.  I don't really have a conviction either way if it's up or not.  However, overall, the week is looking bullish into mid week coinciding with the FOMC meetings before tanking and starting the wave C we are waiting for.

I've noticed many people are seeing a triangle forming which implies further downside below 1608 and consequently below 1598 and that there little probability of revisiting 1650.  My view is although there is a triangle, this could in fact form a bear flag that connects the two most recent lows and with the top of the channel the underbelly of the broken channel that began from the November 2012 low.  This implies that we see prices revisit 1650 and further.

The rationale is:
1.  Hourly OBV is making a series of higher highs and higher lows.  Recently price action has only shown higher lows but not higher highs.  I'm a believer that volume leads price and the bigger the divergence the more likely price will shoot up quickly.

Additionally, volume is testing resistance of the broken uptrend.  Price is still way below.  If price were to test the broken uptrend, this would be around 1660.

If we were in a triangle I would want to check the hourly OBV to confirm the pattern but it isn't.


The following are notes I've mentally jotted down here...mostly just myself rambling away.

My view is we are STILL in wave B.  If we break wave B further, I think A of B finished from 1598 -> 1648.  wave B of B finished at 1608 (1648 -> 1608) and we are in the midst of wave C of B.

If A = C, then a target for the final move of wave C of B is 1608 + 50 = 1658.

If in fact, wave B finished at 1642.63 instead of 1648, then wave C is 1608 + 44 = 1652

There was the positive reversal on the CCI 233 that I mentioned earlier in the week.  This coincided with the ramp from 1608 to 1640.  If this is indeed valid then the positive reversal calculates the following target

1648.69 + (1612 - 1602) = 1658.69.  (1612 and 1602 are ROUGH estimates of the closing hourly bar of the recent lows).

Depending on how you draw the channel from the November 2012 lows, it could be anywhere between 1653 and 1660.  1653 is also the 61.8% fib from 1687.18 to 1598.23.  Hence a range of 1653-1660

The IHS where the neckline is formed roughly around 1637 and the neck starting from 1608 implies a target of 1666 if broken.  1637+(1637 - 1608) = 1666.

So now we have several targets mostly in the 1650-1670 range.  The average of these seems to be roughly 1658.  1658 seems the more likely candidate for the bull case.

In terms of the bear case, I think at present time it is weak.  It will turn strong later in the week but currently it is weak.  I am only expecting 1615-1620 if we break lower on Monday.  This would imply that we truly are in a triangle.

Wednesday, June 12, 2013

06/12/13: looking for a low at the open and then a rally up

No change really, still looking for that last ramp up to 1660-1670 then the waterfall down to 1540-1550.

We have multiple positive divergences on the shorter CCI timeframes and we are now finally sporting a positive reversal on the CCI 233.  This implies higher prices > 1648 as long as the 1598 can hold...

Happy trading.

Tuesday, June 11, 2013

06/11/13: long hedge, looking for visit to 1660-1670

Will try to update more often so it doesn't look like I'm picking and choosing.  A lot of large items occurring...trying to buy a property for one is taking quite some time so have made fewer updates since then.

SPX has been making some serious volatile action.  Perfect for day traders, a bit more complicated for swing traders.

Currently I believe the ramp from 1598 to 1642 is a wave A.  Then the trip from 1648 to 1622 is a wave B expanded flat.  We are currently in a wave C of this corrective move up.  If A=C, and A was 44 points, then 44+ 1622 is approximately 1666.

Let's say we made wave A 1598 to 1648.  This is +50 points.  Then the trip from 1648 to 1622 is wave B then wave C is estimated to be 1622+50 = 1672.

The CCIs on the smaller timeframes are getting squeezed at the bottom, it's ripe to ramp again.  Therefore, I am expecting a large move up tomorrow into 6/13.

However, according to the medium term cycles, the next move up (if it should end somewhere in 1660-1670), should really terminate this leg.

I am still holding some shorts but am hedged with this long position for the ramp for next couple days.  After that I am prepared to build that short position a lot more to take advantage of what I think is the C wave of intermediate wave iv.  It's going to get interesting.

Wednesday, June 5, 2013

06/05/13: continuing to short, looking for 1590-1600

Ever since my last post, SPX has dropped from the 1660s to 1610.  This is approximately a 3-4% correction.

I was looking for 1680 but SPX failed a couple times...the more predominant one was post the triangle breakdown and retest of 1645.  The CCI 8 recorded a negative reversal (CCI level was higher at 1645 than at 1660).  This prompted further deterioration.

These reversals happen very quickly.  For those who were thinking about 1680 (like me) it was a wake up call to reverse positions and go the other way.

When you think about trader psychology, it is during these instances when prices really fall (or rise) faster.  The velocity of price deterioration has really woken up some sleepy, complacent bulls.

CCI shorter term cycles from 8->21 are all showing positive divergence however the longer term cycles HAVE NOT.  In fact, longer term cycles are still projecting deteriorating price but I expect shorter term cycles to start making price "choppy."

NYMO recorded a close < -100.  It's been awhile since we've seen one of these.  The problem is NYMO isn't spiking.  We have to wait for trend power to diminish (ADX) but it is in fact rising on the hourly chart.  This indicates that while shorter term cycles are indicating a bounce (probably to retest failed levels 1620, 1630) those rallies should be shorted.

Target is somewhere below 1600.  I think it fills the gap, and then when media starts piping SPX < 1600 it's time to load up because the bull train is going back up.