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Wednesday, March 31, 2010

Wednesday 3/31 wrap up

The Vindicator Buy/Sell continues to oscillate, with the sell line crossing back above the buy line yet again today at the close.  Really what this is saying IMHO is that neither the bears or the bulls are in control here, a fact that's obvious from the sideways price drift.  Since we are once again officially back in sell mode I will wait for a V Stoch above 75 for a short trade.  If we get a cross by the buy line above the sell before the V Stoch signal, that negates the short trade possibility. 


Doing an Elliott Wave count continues to be problematical.  On the SPX and ES (below) it looks very much like we're tracing out a 5 wave (a-b-c-d-e) triangle since last Thursday's highs, with the "c" leg complete at this morning's lows.  If so we are in the "d" leg up with a final "e" wave stab down yet to go.   Also, if that's the case it would dictate a 5th wave rally yet to come before a more serious correction.


Tuesday, March 30, 2010

Tuesday 3/30/10 Wrap up

Vindicator Buy/Sell threatened to cross into sell mode today but failed.  I backed out a little bit on this graph because there are two things that pop out:
 1) Buying pressure line has been steadily diverging against prices for the last three weeks, and although currently holding above the sell line since close yesterday the gap between the two is relatively quite narrow;
2) We're seeing the oscillating pattern that's shown up before at a trend change.
The conclusion I draw is that we are in some sort of topping process.  I also have topping patterns in some daily technical stuff that I track.  If it is a top, how much of a top? I dunno, I suspect the bull market from Mar '09 is not yet over, but a lot can happen. 

Monday, March 29, 2010

Monday 3/29/10

Buy/Sell line crossed back into buy mode at the close, so possible short trade is off the boards for the time being.  Limited experience with the Vindicator has shown the Buy/Sell lines oscillating around each other at trend changes.  Possibly that's what is happening here.  Whether that is a reliable pattern or not, the fact is that there really hasn't been an up or down trend for over a week, and the Vindicator Buy/Sell + Stoch has not given an entry since last Monday.  If you're a daytrader, that may not be desirable, but I'm a trend trader, and that's exactly what I wish.
For some reason I suddenly can't paste charts into this blog, so here's a screencast of the Vindicator at today's close:
http://screencast.com/t/NWUzZWZj

Saturday, March 27, 2010

Weekend Update 3/27/10

Futures and options are high risk trading instruments.  Thus my goal in trading is to manage that risk.  Sometimes that means sitting in cash (for what sometimes seems like forever) until the right configuration shows itself.  That's the current situation with the Vindicator, at least in terms of the way I intend to use it.  On short trades, the plan is to enter them when selling pressure exceeds buying on the buy/sell line and when the V Stoch has ticked down from a reading above 75.  The tricky part about this is that the V Stoch needs to show movement contrary to the indication on the buy/sell to generate an entry signal, and the market forces generating that movement need to be enough to get to the extreme reading without reversing the buy/sell line.
Currently the V Buy/Sell moved into sell mode at the close on Thursday and the V Stoch bottomed under 25 at the same time.  This is to be expected as the same bearish data that led to a crossover on the Buy/Sell should show up in the V Stoch.  Since then the Buy/Sell has pretty much held steady and the V Stoch has wiggle waggled upwards.  Only if we get that reading above 75 and the Buy/Sell remains in sell mode will I make a short trade based on the Vindicator.  However, we could very well see the Buy/Sell line cross again into buy mode before the V Stoch gives its signal, in which case I will continue to hold in cash and wait for a buy entry signal.  Sitting on the sidelines so far has not really meant a whole lot of lost opportunity, if you look at the last few trading days prices haven't made any really significant and sustained moves in either direction.  And even if they do while I'm waiting for the right spot, I'll gladly exchange missing parts of trends for high certainty of profit on the parts successfully captured.

   My EW count shows us at a the end of 5 waves up from the Feb 5 lows, which dictates a correction of some sort.  I have reason to be not all that confident in the EW count, but the fact that the Vindicator is flashing "sell" tends to corroborate that count.  A break of the lower channel line would further confirm things, that point is at around 1152 for Monday.  Potential downside on the correction is at the .382, .50 and .618 retracement levels which are 1124.50, 1108.50 and 1092.50 respectively.

Thursday, March 25, 2010

Thursday 3/25 wrap up

Long session with tax accountant tonight, so it's late.  Just charts, but we may have seen a significant top today.

Vindicator Intraday:
Vindicator Daily:

Tentative daily EW count:

Vindicator Daily

Vindicator Daily - Stochastic seems to be somewhat worthless, Buy/Sell line is quite interesting:

Wednesday, March 24, 2010

Wednesday Wrap Up

Vindicator Buy/Sell still in buy mode, although buy line curling down and sell line curling up. Stoch also close to buy signal area.  If a long play is made here it would be a low confidence trade IMHO.
EW pattern since Monday is quite muddy so I won't venture to make a count on it until it resolves.
ES still firmly in daily channel up from early Feb low.

Tuesday, March 23, 2010

Deja Vu all over again

Vindicator buy line crossed above sell 1st thing this AM, stopped out of short ES on PM rally.  Still learning this thing, question is if make a trade and buy/sell switches signal should trade be closed and positions reversed? Today that would have been the thing to do.
 On EW analysis, if my count is right we finished a 4th wave and started a 5th today.
Backing out to a longer view, and again if my count is correct, we have one more 4 down - 5 up after this rally before a more serious top.

Monday, March 22, 2010

Monday Mania

Vindicator Buy/Sell shows selling pressure still exceeding buying.  Went short ES around midday when the
V Stoch ticked down from high above 75 (position listed above).
From an EW perspective, the pattern from last Wednesdays high through today's low can still be counted as a 3-3-5 flat type of correction, if that's the case and if it's a 4th wave then we are in an ending diagonal as the low of 4 overlaps the high of 1.  That would also dictate an end to the rally from 2/25 in the very near future.  If the rally ended at Friday's high then the run up today would be a quite sharp W2 of a move down that would have it's start point at Friday's high.  For the record, the rally today did not retrace as high a % of the drop from Fri into this AM on the SPX as it did on the ES.

Saturday, March 20, 2010

Inflection point

Yesterday the Vindicator showed selling pressure increasing above buying pressure (red line crossed above green line) for the 1st time since early February.  This could be the start of a trend change.  The V Stoch bottomed out midday and curled up.  On Monday, if the V Stoch moves above 75 and selling pressure continues to exceed buying I intend to establish a short ES on the 1st tick down from whatever high is reached on the V Stoch.  Two other sidebars of note: very close to a sell signal on my old trading system but not there yet; please note that SPX did not break below up channel of rally from lows of 3/4 - 3/5.

The Elliott Wave count shows the possibility of the completion of a 5 (from low of 3/11) of 5 (low of 2/25) of 5 (low of 2/5) on Friday which, if true, would certainly mark a change in trend as the Vindicator is suggesting.  The fly in the ointment is that the final 5th would be the rally from the low Thur to the high Fri, whose internal structure can be counted as a five wave move but looks much more like a three.  In fact, the whole structure from the high Wednesday thru the low Friday could easily be labeled as a 3-3-5 flat.  If that's the case, them we still have to work our way through one more impulse to (or very near to) a new high for that final 5th wave.
Alternate count:

Wednesday, March 17, 2010

chuga chuga chuga chuga

That train keeps on a rollin'.  The 5th wave of the rally from 2/25 is extending, looks like we finished the 3rd of that today, so should see a sideways track for a day or so followed by one more push before topping,
The big question for the near term is whether this rally from 2/25 is the 5th wave from the low on Feb 5 or if the rally is extending and this is in fact a wave 3 subwave.

Tuesday, March 16, 2010

Whammo

Another up day, got stopped out of short ES.  No time for analysis tonight as almost entire day spent on putting together an announcement on a new market trading tool to be announced on the HOB blog: http://hotoptionbabe.com/   I will be partnering with the host of this site to publish the indicator.  It is called - don't laugh - the "Vindicator" (1st letter of my last name + indicator).  It's been in development since last November and shows the potential for tremendous returns.  I will be using it in my trading from now on.  I also will post a heads up on this site when it is to be published on the HOB site.

Monday, March 15, 2010

Never Never Land

ES broke below the uptrend line overnight last night and momentum indicator threw a sell signal so went short.  However, the pattern from the high Friday into the low today is very corrective in nature, and the move up from the low today is impulsive in nature.  Also, the sell signal on my momentum indicator disappeared, so seriously considering covering the short ES position.  At some point we should see a decent correction but we may not be there yet.

Selling

Short ES (Jun) @ 1140.00, SL @ 1153.75

Friday, March 12, 2010

Five then dive?

 On ES I can count 5 waves up from the 2/25 low at todays high.  As usual with Elliott, there are alternates, particularly the possibility of an extension. But I'm seeing technical divergences all over the place, including on a proprietary indicator I've been tracking for some months now (TBA - am close to going public with that). Plus this is the 11th (ELEVEN!) consecutive up close on the ES and maybe the NYSE (haven't checked), odds of at least one down day are getting astronomical.  Watched all day for a place to short the rebound from this mornings drop, but didn't see what I was looking for until the last hour and decided to hold off until I see what "ramp up" Monday looks like.

The icing on the cake here is that a clear 5 waves up can also be counted from the low of Feb 5.  As with above, there is the distinct possibility of an extension on this move, especially since the 5th wave here is longer than the 3rd.  Time will tell on that, but for the immediate future some type of breather certainly seems highly likely.  Chart of the rally from Feb 5 has to be daily due to 20 day limitation on TOS for less than daily charts, but waves 2 & 4 do alternate and wave 3 is not the shortest:

Thursday, March 11, 2010

Thumping Thursday

Thumping to the bears that is.  In EW terms, looks like we finished the 4th wave of the pattern off the low of 2/25 and now are in the 5th - and final - wave.  Another daily up close on E-minis, that is now 10 days running which is really rarified air.  If this is a 5th wave, our target is in the 1155 - 1160 area using EW analysis.  Still in cash waiting on my system.

Wednesday, March 10, 2010

More up

Sloppy chart pattern today but another up close.  That's 9 days running on the ES which is really pushing the envelope.  Still looking for a short setup, can't be far away.

Tuesday, March 9, 2010

Correction close?

Strong up today until lunch, then a strong down until 1/2 hour before close when we bounced. The EW pattern of the rally since 2/25 is starting to come into focus.  If I've got it right, we finished the 3rd wave of this move at the high today and are in the 4th.  I expect a sideways consolidation into tomorrow followed by a 5th wave to test and quite possibly exceed the Jan highs.  On trading, still on the sidelines, the move from 2/25 is too long in the tooth to chase and haven't had a sell signal on my system from which to establish a short.  If I'm right, that shouldn't be far away. 
One other note.  Today marks the eighth consecutive daily up close on the ES and NYSE (could be on other indexes as well, haven't checked), odds of another up close tomorrow are quite low.

Monday, March 8, 2010

Building a top

Tight trading range, sideways drift today.  No new information.  5 waves up can be counted at today's high, although it's an awkward count.  One more push up of 9 points or so after this small consolidation would fit better from an EW standpoint.  So if we didn't see a short term top today, one is not far away both in terms of time and price.  Still in cash on the sidelines, haven't seen an opening as of yet.

Friday, March 5, 2010

Crank 'er up

Sharp up today, torture to sit on the sidelines.  EW count since 2/25 low can be labeled with market now in 5th and thus final wave of the rally, but price momentum and strong up/down volume today could mean that this rally will extend and that the run from the lows yesterday is the center of a 3rd wave, so that we have a ways to travel yet before any sort of significant correction.  On the flip side, total volume continues to be unimpressive, with no volume spike on today's action.  From a trading standpoint I will continue to tread water until a good opening presents itself, probably will be a short trade.
In the chart below, if we are in fact in the center of a 3rd wave, then the spot labeled "3" would instead be a sub-wave "1" and "4" a sub-wave "2".

From a little longer term perspective, the rally from the Feb 5 lows also can be viewed as nearing completion with us currently working out a 5th and final wave there as well.  It seems pretty likely that we will test the highs of January at ES 1148 before this is done.

Thursday, March 4, 2010

Upward drift

Checked on market, decided to cover short ES somewhere between 1124 & 1122 ahead of tomorrow's unemployment report and reassess after.   9:45 PM

Got stopped out of long overnight, also had sell signal.  Established shorts @ ES 1119 during the day today.  Market moved up today, but pattern is not clearly impulsive.  Also, volume has declined over the last 3 days and is pretty low.  Would seem to confirm that we are in fact building a top and should turn down.  Tomorrow is monthly unemployment report @ 8:30 am (EST) which surely accounts for part of volume deficit.  That's a wild card.  From a wave count standpoint we could break either way, I won't go through the details of the alternates in the chart below, but bearish (preferred) count is in red and alternate bullish count is in green.  From a trading standpoint, will tighten stop down to 1125.50.

Trade

Added 1/2 ES also @ 1119.00

Trades

Stopped out of long ES overnight @ 1114.00
Short 1/2 position this AM @ ES 1119.00, SL @ 1133.25

Wednesday, March 3, 2010

SSDD

Today almost a carbon copy of yesterday, run up in AM for new high for this move, back down in PM to hug trendline at end of day, momentum indicator on edge of sell signal.  Moved stop to 1114.00 last night, still holding long.  Looks like we're forming a short term top.

Tuesday, March 2, 2010

SL

moved SL to 1114.00

Up we go

Market resolved the wedge by a break to the upside today, although there was no real follow through after the initial burst this AM.  Broke the trendline late in the day (although back above it as I write this), which is the first step in a sell signal.  The second step, which is a sell from the momentum indicator, hasn't occurred, so still holding long.  Moved stop loss up to ES 1110.00 which locks in a little bit of the gain.

Monday, March 1, 2010

Coin toss time

The ES down-up pattern since last Tuesday can be interpreted one of two ways:  We are either forming an A-B-C flat correction and are currently at the top of B, or the correction ended last Thursday and we've put in a series of 1-2's.  If we're forming a flat we should turn down sharply very soon with a target at or below last Thursday's low of 1084.50.  If we've put in 1-2's then we should see a 3rd wave in the very near future, which also should be sharp and strong to the upside.  The pattern since last Thursday's low at the moment is a wedge, and a break and hourly close outside of the wedge lines in either direction should point the way.  From a trading standpoint I will hold long unless there's a close below the lower trendline accompanied by a sell on the momentum indicator.  At this point the momentum indicator is solidly in hold long territory, but that can change overnight.  Moved stop today to 1 tick above long entry, so will at the least breakeven on the trade.

Move stop

Moved stop to 1104.25