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Sunday, April 28, 2013

Sunday, 4/28/13 update

This has been a pretty typical bull run since the lows last November in equities.  It's like the energizer bunny - just keeps on shrugging off hits and marching up.  If you look at the charts, corrections have been pretty short lived and of shallow proportion.  My trading has been actually quite boring - I position trade rather than day trade due to demands on my time and attention- I went long ES in mid-November, liquidated that in mid-December due to the holidays, then long Jun ES on Jan 9 and have been holding since. 
However, seasonally there tends to be a spring top followed by some bear action ("Sell in May and go away"), and the market does appear to be in the process of forming a double top over the last couple of weeks or so.  The EW count has needed modification several times in recent weeks as the bull move has kept extending, but the current count (if correct) has the ES in the 5th wave of the move up from the mid-November low.

It should be noted that the prior short term count had 5 waves complete at the Apr 11 ES high at 1593 - and that may turn out to have been correct in the end IF the current rally that started Thur Apr 18 fails to put in at least one more push up that gets it at or very near to the Apr 11 high.  The other thing to note is that there is the possibility that this current move up from Apr 18 will also extend - meaning it could push well beyond that 1593 mark.

This site is currently tracking 3 possible long term EW counts.  Of the three, the 1st alternate below is becoming less and less likely as time and price go by - in fact, it's probably only a 1 in 4 shot.  The 2nd alternate also will recede in likelihood if the ES/SPX continues it's upward march.  Which leaves the very bullish 3rd alternate, unpalatable as that may be for long term bears such as myself.  But it is what it is.  One thing to point out in the context of that 3rd alternate is that it takes the view that the market is in a Cycle Wave 1 off the Mar '09 lows.  In EW, 2nd waves can retrace almost all of 1st waves and still be valid as long as they don't run past the point where that 1st wave started.  Which means that Cycle Wave 2 in the bullish alternate is allowed to drop all the way back down to the high 600's in the ES/SPX and still fit EW rules.  So maybe the things that give rise to current bearish sentiment may eventually cause the bear downdraft that those sentiments anticipate and still support the bullish alternate.

Alternate #1

Alternate #2

Alternate #3


  1. great long term options presented.... all look very seems to be leaving options open for stopping QE now (alternate 1) later (alternate 2) or never ever ever ever... (Alternate 3) or until things start breaking apart...and control slips through the CB's hands

  2. Wow somebody actually left a comment. Many thanks - it's interesting, my site gets as many as 100 hits a day, but nobody leaves a comment (except for spam) - I've been wondering if folks are having trouble using the comment function?
    As to the long term alternates in this post, I'm a long term bear, but I have this bad feeling that alternate #3 is closer to the truth then the other two. The market is the final arbiter, and right now it's saying onward and upward. For the time being at least.

  3. also a long term bear... however I keep going back to chart where I had the middle of last year as a running flat and just what if we are about to enter 3 of 3 here... can't quite fathom this but hey what the hell... why not...if they can take the market to 1600 with no funnymentals then why not 1700