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Paul Mosgovoy
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Truth is timeless: “Markets never change” – Jesse Livermore, 1923 The early masters, Livermore, Wyckoff and Loeb isolated themselves from the crowd and crowd thinking. None of them ever graduated high-school and yet they each became legends in the market. Their techniques have been time-tested.... More
  • Testing A 5-Year Trend-Line 2 comments
    Aug 11, 2014 5:12 PM | about stocks: IWM

    The weekly chart of the iShares Russell 2000 ETF (NYSEARCA:IWM) below shows detail of price action testing the underside of a trend-line break.

    (click to enlarge)IWM Weekly

    Chart by TeleChart

    Notice that price action began to fade at the close (as seen on a daily chart....not shown) and was not able to hold near the high of the day.

    That action suggests that the break is going to hold and that the reversal from early July is still in place.

    I have updated my view of the Elliott Wave count on the hourly chart below.

    (click to enlarge)IWM Hourly line

    Chart by TeleChart

    Since today's action was a 38% retracement from the low, I have changed the count to indicate that we may be at the top of Wave 2.

    I am not going to list an "alternate" count as I consider Livermore and Wyckoff analysis to be more reliable than Elliott Wave (as stated in previous updates).

    The purpose for using the wave counts was to generate a projection for the on-going move. If we are indeed at the top of Wave 2 and about to continue down. The downside target for Wave 3 is now in the area of 100 - 103.

    I have used the P&F charts as well to obtain a projection. Those projections are posted on my LinkedIn account.

    Please reference this link for the P&F counts.

    Disclosure: The author is long TZA.

    Additional disclosure: Illustration only. Not investment advice.

    Stocks: IWM
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Comments (2)
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  • retpdguy
    , contributor
    Comments (206) | Send Message
    Enjoy reading and following you Paul. I took my tza profits Friday and went long sso. I'm neutral iwm. Long sso with a stop at 1985. If the spy breaks 1985 the market will correct big. My two sense. I realize sso is 2X so I will equate a 1985 spy accordingly.


    Would love to read your comments.
    11 Aug 2014, 09:45 PM Reply Like
  • Paul Mosgovoy
    , contributor
    Comments (120) | Send Message
    Author’s reply » I am pleased that my updates are helpful. Thank you.


    My position with IWM is on a longer time-frame (weekly and monthly). On those time-frames, there is no exit signal (according to my method). Therefore, the position in TZA is being maintained.


    It is a little frustrating to see the trade oscillate. However, there may be the possibility of a big (unexpected) down move. I want to be sure to be in position if that takes place.


    The SPY might have a short bounce to test the underside of its recent break. If so, the move might be brief.


    My own experience is that I have found the SPY to be very frustrating to trade. It is probably the most heavily computer controlled (traded) index and therefore, I tend to stay away.


    Obviously, others may be better at the SPY than I am.... :-)


    Thanks again,


    12 Aug 2014, 08:49 AM Reply Like
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