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  • Taper Tantrum 0 comments
    Jun 6, 2013 2:23 PM

    That's what CNBC calls this sell-off and rightly so.

    We have two high-probability short-term trades on the Daily Charts per previous Comments and Instablogs:

    << Dow Jones Aggressive EWA:

    << SnP500 Conservative EWA:

    And they are now in Pullback Mode:

    >> Dow Jones Aggressive EWA:

    >> SnP500 Conservative EWA:

    As in always, a hard break of the 50ma Support is considered bearish and majority of traders will wait for SnP500 and/or Dow Jones to make a touch down to the 200ma Support to initiate longer-term trades. For Day-Traders; a test of the 50ma support is what they have been waiting for to initiate short-term Trend Trade.


    Trading Strategies:

    The super-duper trade I made for the SSO recently proved to be a losing trade as the markets kept plunging down yesterday and today:

    << SSO Failed EWA:

    Actually, it was a correct analysis/trade in that IF the v-th wave down goes more than 1.62x of the I-st wave then SSO can result in a Spiral Meltdown. But a losing trade non-the-less with controlled stop loss.

    * Can't win them all. Traditional trading objective is to improve trade success rate to 60-70% and/or improve reward to risk ratio to 3:1. With intraday entries and/or exits the success rate can suffer considerably due to multiple whipsaws but the reward to risk ratio goes way better than 3:1 with tightly controlled hard stop loss provisions.

    Right now the better trade is either buy the 50ma test (for Day-Traders) or wait for the Jobs Report.

    - If SnP500 gaps up tomorrow then it becomes another Trend Trade that may or may not result in new highs in the days and weeks ahead.

    - For the Swing Traders; the better course of action is wait for SnP500 to test either the Daily 200ma Support; or the Weekly 20ema Support (SnP500 is trending on the weekly and thus the 20ema is a potential Holy Grail Trade; or wait for SnP500 to test the Monthly Chart Breakout Support of 1576.

    ** I started buying SSO again today (as a Day-Trade) using the 15min Divergence Buy Signal with today's low as the hard stop loss to minimize potential losses. Will add some more if a rally happens tomorrow.

    >> SnP500 Intraday EWA + TA:

    Objective is to sell half on a A-B-C intraday rally (b-wave on Daily Chart) then hold on the other half just-in-case SnP500 fails to produce a lower low on the Daily Chart.

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