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The Die Is Cast

Not the Fiscal Cliff. At least not yet.

The Zweig Breadth Thrust triggered today:

- img15.imagefra.me/i5bt/aarc/141u_708_ubk...

This is a very important for TA Traders like me since ZBT is an Indicator that rarely triggers with 80% success rate when it did. The only parameter I know with higher rate is when the 3rd wave goes extended thus there is 90% probability the 4th and 5th waves will happen. But then the rewards becomes very small since usually the 5th wave will be equal to the 1-st wave. Most of the time I prefer to counter-trade a 5th wave since the rewards are much bigger on either a pullback or a counter-trend and the risk smaller than trying to catch the termination point of a 4th wave - on shorter timeframes. ZBT promises 11 months of rally and possibly more than 20% gain.

SnP500 is not out of the woods yet:

- img15.imagefra.me/i5bt/aarc/141u_fa0_ubk...

Once Spx is able to over-come the 1422 Breakdown and the 50ma Resistances (at the same time); then it can trigger a massive short-squeeze among the bears and possibly propel the price back toward the last high of 1474.

Bullish and Bearish Scenarios on the Weekly Chart remain as they are as illustrated on the previous Instablog.

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Trading Strategies:

With such major development in Technical Analysis I will be using Trailing Stops for the 1/3 SSO Day-Trades bought in June and July bottoms instead of selling them as per last Instablog. Also will short ES as a Hedge if SnP500 forms a credible A-B-C Pullback Up. Otherwise I will keep the YM and NQ as Swing Trades to the upside. Trailing Stops and Hard Stops are SOP Trading Strategies thus all Swing Trades since Oct 2011 and Day-Trades since June 2012 will have their corresponding protective stops.

* I bought MSFT yesterday using the Bull Flag Trade Setup (see latest comments). Microsoft, however, is still a very risky trade since the wavecount to the downside is very much incomplete with a potential to go into a Spiral Meltdown. Thus as much as I would like to invest in MSFT; I will not consider this latest buy as an investment but rather as an initial trade with possibly half to be sold on a pullback up if MSFT keeps under-performing the markets short-term. Will keep MSFT if it suddenly rallies hard.