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Profit-Taking Strategies

Bernanke is expected to speak tomorrow = uncertainty should prevail today and tomorrow. Expect the markets to whip around or at least trade in a narrow range. Also, we are entering the Earnings Season a.k.a. Silly Season thus uncertainty might prevail in the next few weeks.

For trading purposes we have at least 4 scenarios on the medium-term basis from the Long-Live the Queen Part II Instablog:

#1 SnP500 Conservative Scenario:

#2 Dow Jones Aggressive Scenario:

#3 Rusell2K Super Aggressive:

#4 Rusell2K Super-Duper:

With at least 4 scenarios on the Weekly Charts a 'process of elimination' is needed to come up with the highest probability. This can be achieved by analyzing the lower-degree timeframes such as the Daily and/or Intraday chart patterns - that can provide an early clue:

#1 Dow Jones Daily:

#2 SnP500 Daily:

# Russell2K Daily:

3 different scenarios on the Daily Charts with Russell2000 chart pattern the highest probability scenario since it is supported by the same pattern that has developed at least on XLF and $SOX - among other sectors.


Trading Strategies:

With far too many possible scenarios, trading these markets with high efficiency and/or effectiveness can be considered daunting, if not almost impossible, at the least. Thus, trade profitability is dependent more on how the trading strategies are formulated.


As per last Instablog I bought SSO at $76 to $74 on the way to the $72.45 bottom and YM at almost it's bottom run. That's the Trade Entry Strategies. I leveraged my account to 135% (from 105%) for this trade in order to at least be able to capture 2 or 3 scenarios - of the still very hard to determine future price actions.

Next is the Profit Taking Strategies:

SSO Profit Taking Strategies:

#1: I sold 1/3 SSO longs today (before the open) as it is an A-B-C or 1-2-3 rally on the Intraday 30min Chart with $81.07 Nominal Target for the 3rd wave if SSO is a 1-2-3 on intraday. Thus the cash markets are expected to finalize a minute-degree rally that should last several minutes to a few hours today before undergoing either a Meltdown or another a-b-c pullback down for the 4th wave Intraday.

#2: Will sell another 1/3 if and when Russell2K approaches it's 5th wave target of 1029 Nominal Target and/or SnP500 finalize a 1-2-3-4-5 rally on the Intraday Chart with Nominal Target of 1670 and an upper range of 1696.

#3: Will keep at least 1/3 long positions just in case the SnP500 Daily Scenario OR the Russell2K Super-Duper Scenario unfolds.

#4: Now using Trailing Stops on the 2/3 remaining positions in order to prevent trading loss just-in-case SSO suddenly goes into a Meltdown.

IF the SnP500 Daily Chart Scenario starts to unfold. More likely I will be buying an A-B-C Pullback Down that may last a two to three weeks after the Intraday 1-2-3-4-5 rally has completed - as a Day-Trade separate from the Taper Turmoil Trade.