Market Thoughts and Analysis

EW Shenanigans

2012-01-26T10:25:00.002-05:00

There are still a lot of 'Minor 1 / Minor 2, start of P3' myths floating around. Please read this post as well: Regarding Tops and Sloppy / Misleading EW Practices

Jan 23

2012-01-23T09:46:00.004-05:00

Three swings and three misses. That's a strikeout.

The topping signal on the 60-min system that happened last week has now completely cleared without ever having a selloff. The strength of the buy signal on my Daily Chart has been enough to keep pushing the market up despite the shorter term (60-min) divergences.

It seems to me that the 'volatile/swing traders' market of the last 6 months has been replaced with a 'grinding/the trend is your friend' market.

Props to everyone (which is not me) who stayed long since Christmas.

Jan 16

2012-01-16T15:39:00.001-05:00

Current EW count for anybody that cares. If we get a pullback this week, then I think it could be a retest of the breakout. And yes, I do think it would end up being a good dip to buy.

Jan 13

2012-01-13T15:29:00.003-05:00

I have been very busy, and with how sideways / ridiculous the market has been the last 2 weeks it has been a perfect time to be laconic.

My 60-min system has been trying to roll over and the market has faked it out a couple of times recently (2 swings and 2 misses since the new year). Today looks like a pretty large island reversal. So following the system and going short again.

Update on Long Term Projection

2012-01-03T12:51:00.004-05:00

Here is an update on my long term projection. It hasn't changed in the last several months, so there will be no new long term analysis in this post. Just some chart updates and references to my previous work so you can follow why I arrived at this projection.

-- Nov 2010: Abandoned the Primary 2 count and adapted my leading alternate count which was a Cycle X count - The Large Count

-- Jan 2011: Rethought the size of Cycle X with some historical analysis and comparisons. I lay out my thoughts for March 2009 - June 2011 (projection at the time) being only Primary W of Cycle X - The Large Count with Historical Perspective

-- Jan 2011: Macro thoughts that accompany my projection - Macro Thoughts and Observations. Is the Bear Market Dead? Is this the Start of a new Secular Bull Market?

-- Feb 2011: Long term context - Secular Bear Market Projection in Historical Context

-- Mar 2011: An in depth study and a comprehensive list of references and analysis of previous work. I highly recommend reading this post and following the references - First Derivative of the S&P 500, Long Term Study

-- May 2011: Count of the large structure (the top of this wave) being completed in real time - May 5 (and a Long Term View Update)

-- Aug 2011: Macro thoughts in the middle of the August crash putting this wave in context (specifically refuting that this was the start of 'P3') - Update on Long Term Projection

-- Oct 2011: Real time count that pointed to the October low as being a significant low based on how the waves and indicators unfolded - Revisiting the Large Count

Rally from July 2010 - May 2011. It is corrective, not impulsive. Subsequent price action is also corrective, not impulsive

Last two Primary Waves and upcoming Primary Wave projection

Alternate View: Looking at the large scale triangle formation and a count that might go with it. The point being that this is another way to look at the large scale structure. But whether it is counted in the above manner or the below manner, the overall structure and projection is approximately the same. See this post for where the idea was originally explored.

Update on studies that support the hypothesis that we are in the middle of a cyclical bull market, not at the end of one:

-- Moving Average 'Price Stretching' Update, Nov 2011
-- BPSPX Update, Nov 2011
-- Yet another reason why I don't think we saw 'the' top (3), Nov 2011
-- Yet another reason why I don't think we saw 'the' top, Sept 2011
-- Yet another reason why I don't think this cyclical bull is over, Aug 2011

Secular Bear Market Projection

Jan 2

2012-01-02T11:59:00.005-05:00

Just a quick 'Year in review' for my 60-min Trend System:

For a very volatile year (SPY 2011 -- Net Change: 1.9%, Max: 9%, Min: -11%) that was basically sideways, I am quite happy with my system's performance.

Here's to good trades for everybody in the coming year!

Dec 30

2011-12-30T14:27:00.002-05:00

My 60-min Trend System issued a sell signal. See here and here. (These updates are sent out as part of my Trend System Notifications).

This was not a clean-cut call, and at best it could be called an 'early' sell signal. We had none of the markers that I look for at sub-cycle tops, especially given the setup that I discussed here. So honestly I still think this wave could continue up in early January.

But what happened today:
1) 15-minute sell signal (again, like the one on Wednesday)
2) 60-minute main indicator rolled over. It is unconfirmed by other indicators on my system, but I am going to listen to it right now.
3) Last trading day of the year and the long weekend before the next trading day.

So I am just choosing to heed my system 'warnings' (not official sells) and walk away until next week. I am fully prepared to buy again if my main indicator turns back around. And if Tuesday ends up being a large gap up, then so be it. I would have liked this week to end on strength in order to hold over the long weekend, but that doesn't look like its going to happen. So it is wait and see mode for me.

Happy New Year Everyone!

Dec 28

2011-12-28T16:19:00.002-05:00

Not a fun day to be long in the market (which I was and still am).

My 60-min system did not officially give a sell signal. The top occurred with no divergence. The setup that I mentioned on Friday is still valid. So I am staying long (perhaps foolishly, we will see). A few reasons for staying long despite the mini-bloodbath today:

1) Top occurred with no divergence on my 60-min system. There was divergence at the top on my 15-minute system. There was also divergence with the low today. We will see how that manifests tomorrow morning.

2) This was a very interesting statistic from 'Trading the Odds': http://www.tradingtheodds.com/2011/12/high-number-of-52-week-highs-in-december/. We also needed a correction for the rally (likely brought on by end of the year tax selling into this rally), but I am still looking for more upside based on my own system and statistics as well.

3) In a very un-quantifiable / un-analytic fashion today didn't feel like the start of a major correction, more like a reaction. Now, the market could spit in my fact tomorrow and say 'I tried to warn you'. And if that happens then so be it. But my gut says to stay long, so I am going to see where this goes.