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  • The Fear Trade, The Hope Trade, And The Panic Trade 0 comments
    Jul 23, 2012 3:43 PM

    We often paraphrase this as The Good, the Bad, and the Ugly - in that order.

    For EW Practitioners; it is better paraphrased as The Fear, the Hope, and the Panic Trades (in that order) which is basically an A-B-C Pattern during corrective phases. For impulsive trades we use 1-2-3-4-5 - either to the downside or the upside.

    Of major importance for a 1-2-3-4-5 entry is that rallies (and corrections) start with an initial i-ii-iii-iv-v bounce off a significant bottom (or top) followed by a minute a-b-c pullback. But for those who prefer to trade the A-B-C or a-b-c pullbacks; the best entry is to counter-trade the C-wave which is also a i-ii-iii-iv-v. The latter is corrective as part of an A-B-C pattern while the former i-ii-iii-iv-v corresponds to the subwaves of an impulsive 1-2-3-4-5 run specifically the 1-st, 3-rd, and 5-th waves.

    >> A-B-C Monthly: g38.picoodle.com/ltd/img38/5/10/21/aarc/...

    The monthly chart is easy to understand. The weekly and daily charts are far harder to interpret at this moment in time being 50-50 on many occasions (as detailed on many charts in past Instablogs since early last year) specially for the weekly charts.

    Since we are more concerned on the short-term trades these days; it is far better to give greater emphasis on Daily Charts' Conventional TA instead of EW TA as they can provide a better guidance in this mighty struggle between the bulls and the bears:

    >> SnP500: g13.picoodle.com/ltd/img13/5/7/23/aarc/f...

    >> Dow Jones: img15.imagefra.me/i57n/aarc/141u_4ce_ubk...

    >> Compq: img14.imagefra.me/i57n/aarc/141u_691_ubk...

    The 50ma and 200ma are the most significant indicators at this moment in time. SnP500 is still above the 50ma while Dow Jones and Compq are making an effort to bounce at this time.

    SnP Intraday:

    > SuperBulls: img13.imagefra.me/i57n/aarc/141u_428_ubk...

    > Conservative: img15.imagefra.me/i57n/aarc/141u_25e_ubk...

    This is still a judgmental trade since higher probability is that the vertical drop today is a 3rd wave for SnP500. However, since Dow Jones and Compq are trying to bounce off their daily 50ma supports; a sudden rally may actually happen. Last Resort Support is still the 200ma.

    -----------------------

    Trading Strategies:

    I sold 1/3 of SSO (bought at $51.++ and 52.++ near the $55.74 60min Double Top Resistance (when SnP was testing 1374.81 Double Top) Thursday and sold another 1/5 today on intraday pullback up. Will buy them back on a Divergence Buy Signal using either the 15min or 30min charts more probably tomorrow if the Conservative Wavecount proved successful.

    For those not well-versed with Intraday Chart trading; better wait for Apple (NASDAQ:AAPL) Earnings Report tomorrow. AAPL is now the largest company in the US and can possibly move the Nasdaq primarily and to some extent the SnP500 - either to the upside or downside - dramatically.

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