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  • Capitulation Selloff Today 0 comments
    Jan 28, 2010 4:30 PM

    SnP, Dow, and Compq were able to achieve their 5th wave down target on the 120min chart early in the morning.

    45 minutes after the open;  the stock markets made it abundantly clear it was in a capitulation selloff or what we Elliott Waves analysts call the 5th wave with the start count at 1150.  I sold my SPY buys yesterday at tiny profits.  No need to lose money when the markets were decidedly bearish right off the open today.

    Spx target was 1079 intraday using the 120min chart.  The daily chart target was 1078.46.  Spx decided to reverse at 1078.45.  Talk about precision.  But usually the intraday target were more precise than the daily.   I bought SPY at target $108.10 ($108.11 limit buy).

    Dow target was 10,046.  It was apparent Dow was stronger than SnP when SnP was approaching the 1079 intraday target.  And DDM or 2xETF for Dow was stronger than Dow itself.  So I bought a lot of DDM at average price of $41.06.

    TNA or the 3xETF of Russell 2000 was showing considerable strenght by not reaching the downside target of $38.01 while Rut was able to reach it's 604.04 target.  So I bought some TNA average price $38.64 as an afterthought.

    I had been waiting for UNG to complete the A-B-C down for weeks.  Today it was able to reach the C-wave target of $9.33 on daily chart.  30min chart target was $9.19 but UNG reversed at $9.22 instead leaving my limit buy of $9.20 unfilled.  Bought UNG on the first pullback at $9.28 instead after the first bounce up using 5min chart.

    Bought some USO yesterday on 30min target of $35.67 (limit buy $35.68).  Today USO or oil ETF was able to prevent going lower low while the UUP or US$ ETF was in a breakout rally mode toward new intraday highs.  So added some more USO at $35.78 or 79% retrace of yesterday's afternoon rally.  Traders are supporting oil despite the apparent considerable strenght dollar is showing today.


    SnP500 target is  double top at 1150 initially and 1170 medium term.  I will keep some SSO, SPY, and DDM swing longs for potential run toward 1230 just in case 1170 resistance dont work and we got a vertical rally on the weekly chart.  Bought SSO long time ago Oct 2 and Nov 2, 2009 at average price $32.26.  Sold 8/12 holdings so far on the way up toward 1150 target.  1150 is a major confluence of resistances on the monthly chart.  1230 area is another major cluster of resistances on the monthly chart.  Dow Jones has a major cluster of supports in the 10080 to 10120 range.  Dow penetrated it a little today with a temporary bottom of 10055 but not necessarily broken before the bounce or initial rally off tentative bottom happens breaking above 10120.  Dow closes at 10119 today.

    UNG swing trade target is $11.67 if it rallies starting today.   $14.12 to $15.64 target range for longer time frame if it can rally much higher than $13.19 within 5 to 7 weeks.  Then presumably be able to reach ideal target of $14.12 in perhaps 18 weeks from today - that is, on a sustained rally if it happens.  Hopefully, UNG will keep rallying even after the winter season ends.  So, I will be using trailing stops just in case it started selling off on or before winter ends.  Sell most of positons along the way as the rally progresses.  Preferably 1/3 position at $11.67 and another 1/3 before winter ends.  I bought lots of UNG at $8.56 average price in Dec 3, 2009.  Sold some during the first 17 days of rally then bought them back today.

    Oil (continuous contract) has a potential to rally toward $108 medium term and $147 longer term.  For now it is in a funk not knowing what to do.  This current trade is based on an assumption USO will trade within the trading range of $35.22 to $41.92 with a contracting triangle the highest possible pattern it may be forming by now if the current form persists;  therefore, target for a swing will be in the $40.80 area;  sell some then buy some more if it goes down toward $35.90 area. Keep doing until the triangle finished forming and a massive rally follows the breakout away from the triangle.  That is, if a triangle does happen.  Triangle forms when there is too much confusion or uncertainties among market participants regarding the future course of direction of an investment instrument.  This area in the weekly chart is an ideal place for a triangle on the daily chart to form for oil CL #f and USO.  I bought USO in Dec 11 and sold 3/5 positions when CL #F was at double top $82.  The 2/5 trailing stops have been taken out during the most recent downturn on daily.  Repositioned yesterday and today.

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