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  • Catch Me If You Can

    Since April 24, SnP500 has been whipping around using an intraday Inverted Head and Shoulders similar to what Compq did then made an attempted rally:

    >> Compq Head and Shoulders on Daily:

    >> Compq InvHnS:

    >> SnP500 InvHns Intraday:

    >> SnP500 Cont Inv HnS on Daily:

    There are many ways to skin a cat for TA Traders.

    For the bears it is obvious their Divergence Sell Signal for Compq worked quite well and many profited by it by covering some positions as Compq tested it's major 200ema Support.

    Likewise, early bird bulls were able to take advantage of the Daily 200ema support, right off the bat, in April 15. And presumably have already taken some profits off the first or second red bar that appeared in April 23/24.

    For intraday traders it is obvious there are far more patterns that the bulls and bears have been playing. Those intraday patterns are also very useful for Daytraders for precision entries/exits.

    That's just the name of the game. Seasoned traders are usually not perma-bulls nor perma-bears. They know how to play the game and the bulls will give the ball to the bears when the probability of the market to go down becomes imminent. Likewise, bears know their limitations thus it is almost always a safe play to take partial of full profits off the Daily 200ma Support (Tech traders favored the ema in this particular case).

    >> Compq 30min Chart Bull Flag:

    Right now, Compq is 'Good to Go' for the very short-term trend traders with a mini Bull Flag on the intraday chart.

    Trading Strategies:

    I was trying to post this Instablog before the open (or before the e-minis rally). But right now ES, YM, and NQ are rallying before I can post. Thus higher probability the cash markets will open with a minor gap up on the 15min to 30min charts UNLESS some bad news appears at 8:30 a.m.

    Thus, for those who would like to chase this rally off the April 15 bottom for Compq; SnP500 and/or Dow Jones; buy strategy is usually during a gap up in the cash markets such as for SPY, DIA, and or QQQ. Most of the time the gap becomes the support. Stop loss is of course yesterday's low. Avoid Russell2000 as it is the one being heavily shorted.


    This is a heads up for those who were not able to buy in April 14/15 and/or in April 28 as Compq formed an Inverted Head and Shoulders as illustrated in my Comment of that date.

    As the title says: Catch Me If You Can. A mini-Bull Flag on the 240min chart is perhaps the last buy on mini-pullback down. After that, those who would like to chase the rally will more likely end up buying on breakouts.

    For me: I was not able to sell some YM positions in April 24 as DJ and SnP500 suddenly went down with a potential truncated v-th wave on intraday charts. Instead I sold some on intraday a-b-c up in April 29. For now, I bought the YM back yesterday after the close with very tight stop loss. Sold some SSO in April 24 but decided not to buy it back.

    10:30 am Update:

    TNA, together with QQQ, went into a mini-flash crash right after the open. DIA and SPY and SnP500 tried to hold on to their gap up but later went down in symphaty to TNA and QQQ.

    This trade is another one of the 35% Bull Flag Failure Rate. At least for Intraday Trend Traders. For Daytraders who bought the April 15 bottom; the trade remains viable until proven otherwise.

    - SPY is now a potential 'bigger' Bull Flag on the 30min chart as it re-tested the Daily 50ma Support with minor penetration. Those who might still want to use the bigger Bull Flag for SPY may do so. If a strong bounce happens on the 5min chart happens; then a slow-grinding a-b-c down would be the ideal buy strategy. Preferably if SPY forms an Inverted Head and Shoulders on the 5min chart = to minimize potential loss just-in-case Yellen's testimony becomes bearish harbinger to many traders.

    - The 5 to 7 days rally off April 15 is being consolidated for 9 to 11 days now. 7 days rally for EWA with truncated v-th wave on intraday, 5 days for TA traders. Thus, SnP500 should be rallying sooner rather than later. A prolonged consolidation range can make it extra heavy and many trend traders might just abandon the trade for lack of action.

    - Note that if SnP500 and/or Dow Jones kept re-testing their daily 50ma supports without going into a strong rally; more likely those supports are going to fail. Thus, protective stops are necessary. For now, Daytraders are still in the go-no-go situation as SnP500 and Dow Jones whipped around.

    Compq is definitely not a good buy right now together with Russell2000 - at least on the intraday charts. Unless they show considerable strenght.

    For me: The YM I bought yesterday's after hours proved to be a failed trade as the trailing stops triggered with tiny profits. I bought it back as Dow Jones made a minor false breakdown on the 15min chart AND as ES made a touch down to it's 120min 24-hr Bull Flag Support. Now using trailing stops in order not to incur losses.

    >> Dow Jones Intraday NOW:

    >> ES Intraday Bull Flag:

    Definitely not an easy trade trying to catch this rally 'while I can'. At least for the YM Buyback Trade.

    May 07 8:26 AM | Link | Comment!
  • Half The Battle Won

    SnP500 trashed around near the bottom before finally rallying. Compq 200ma proved to be a strong magnet that prevented SnP500 from rallying straight off it's A-B-C bottom run (or the Bull Flag Support):

    >> SnP500 TA Bull Flag:

    >> Compq Daily Chart TA:

    For the purist EWA this could be an acceptable wavecount albeit with minor deviation from the ideal EW Rules:

    >> SnP500 Intraday EWA:

    For the EW'ers; SnP500 remains a viable short-term to medium-term trade for the bulls if SnP500 actually performed a Flat Pattern formation from the Jan 02, 2014 lower high top for 3+ months making this the second consolidation range since the late May to early Oct 2013 consolidation range that lasted 4+ months.

    For the weekly chart EWA; see the previous instablog.


    Trading Strategies:

    There's nothing new of importance to analyze at the moment for the medium-term and as such the bullish Swing Traders and/or Medium-term Trend Traders still have the upper hand. But with the divergence sell signals on the daily, weekly, and monthly charts triggering, as illustrated last April 13; medium-term trend traders should take precautionary actions by taking some profits off the table. During a bull run, it is far harder to find topping patterns - than bottoming patterns - thus CAUTION is better trading strategy at this stage.

    For Daytraders who bought at or near the April 13 bottom; taking some profits off the table is almost always an SOP. Ideally, SnP500 and/or Compq should form a 1-2-3-4-5 rally on the daily chart before finally closing the daytrade. For now CAUTION is the better trading strategy.

    For the moment: Timing is everything specially with SnP500 forming a very complex rally that may prove far beyond my capability to analyze correctly. With correct timing, half the battle is already won. Use trailing stops to protect paper profits and let the markets decide the next move.

    For me: I bought some NQ and SSO when Compq went for a test of it's 200ma support in April 15 - in addition to the YM buys of April 13. For now, I would be selling some YM and/or SSO as SnP500 approaches it's intraday target. Since there is no high confidence analysis on the intraday, daily, and weekly charts; I would rather trail my long positions and let the markets decide either to rally or to reverse the trend.

    * Also bought some AAPL as it approached it's 200ma support per my Comments the previous week(s) and some other tech stocks such as GOGO for swing trades and/or medium-term trades. I sold some AAPL last Monday as a precautionary move as it made a test of the 50ma resistance. Now using trailing stops on the rest. Will try to add some GOGO medium-term trade if and when it makes a pullback toward the A-wave support as illustrated on my latest comment.

    Apr 24 9:03 AM | Link | Comment!
  • Analysis Paralysis

    SnP500 rallied strongly with 90% probability a 1-2-i-ii-1'-2'-3'-4'-5'-iii-iv-v-3-4-5 complex spiral meltup would happen from the April 7 intraday bottom (when viewed on the 9min chart).

    But alas, there will always be 10% probability it would fail.

    >> SnP500 Intraday Impulsive Rally before it completely failed:

    And indeed, SnP500 failed to sustain a fully qualified impulsive rally for the first time after an extremely long. long.. long... time. Too long I can't remember a single incidence (or a few instances) it actually failed in the last 5 years on the intraday charts. So far none on the daily chart.

    Well ... for some even a 1% failure rate can be intolerable. For us, seasoned traders; we thank our lucky stars if we can achieve more than 70% success rate on all our trades.


    For the Bears:

    >> Daily Bearish View:

    >> Weekly Bearish View:

    >> Monthly Bearish View:

    Compq is considered 'broken' by many traders and a Head and Shoulders will be the next expectation among the bears whether they are daytraders or swing traders.

    For TA Contrarian Traders, their wish is the market's command - at least for the moment as the weekly and monthly divergence sell signals triggered last week for the SnP500. Whether a meltdown will actually happen remains to be seen. Contrarian bears should nurse their positions accordingly.

    The current bull run is not over-extended on the daily, weekly, and/or the monthly charts. This type of bull run is not known to just suddenly die without considerable backing and filling near the top. Rallies tend to levitate - at rarefied heights - with lots of air pockets - for prolonged periods of time before they finally succumb to gravity. Bull runs that have gone over-extended were the ones that showed sudden reversals - in majority of cases.

    Yet, there is valid cause for concern as the 127.2% and 138.2% Fibonacci Extensions are known to be either profit taking levels and/or trend reversal levels for the SnP500 on shorter time frames.


    For the Bulls:

    >> Intraday Bullish View:

    >> Weekly Bullish View:

    A Bull Flag is a Bull Flag with 65% probability it will work over and over again. But of course; there will always be 35% failure rate.

    For TA Trend Traders; Compq and Russell2000 approaching their 200ma supports are major events for Swing Traders and Medium-Term Traders. Many of them have been waiting for this to happen in order to initiate new trades to the upside. The only problem is that heavyweight SnP500 remains well above it's 200ma support and if (and only if) SnP500 decides to go down; highest probability is that Dow Jones, Compq, and R2K will go down too.

    >> For EW'ers:

    That's the most consistent EWA I can come up with. Only problem is that EWA is not a science but rather a combination of science and art. Thus, the highest probability today might morph into something else later on. The important part is that there are statistically reliable probabilities we can rely on - most of the time. Thus, if something unexpected happens; we are far ahead of many other traders who do not know what to do when their trades go against them.


    Trading Strategies:

    With Sectors Rotation in full swing; I was expecting some kind of weird market price actions since June 2013 thus I kept recommending short-term trend trading rather than swing trading and/or medium-term trading. Likewise, I do not expect EWA to be the master but rather the markets WILL be the master thus I kept emphasizing that Technical Analysis should also be given some weighing when making a daytrade and/or a swing trade. So far they did well as at least 7 daytrades proved to be highly profitable since June 2013. Those who took contrarian daytrades, in addition to trend trades, would have done far better than most. In my case, I prefer to just keep hitting the uptrend while it lasts. Too much success can lead to over-confidence.

    Likewise, I made several statements before that I would try to go short ES if and when SnP500 went into crappy or slow-grinding pullbacks up after - a strong run down. Fortunately it never happened (yet) and my long-side trades proved profitable most of the time. Unfortunately, my long-term portfolio remained not hedged and thus is highly vulnerable to unexpected major market correction.

    With those backdrops in mind; I would like to re-iterate that Multiple Divergence Sell Signals can and will result in a Trend Reversal sooner or later. However, TA Traders respect strong momentum which the monthly chart is showing. Right now SnP500 was able to reach the 77.88 RSI level comparable to that of Oct 1983 = that was followed by more rallies for a total of 251% vertical rally in 5 years starting August 1982. It can happen again this time around.

    << SnP500 Before:

    >> SnP500 NOW:

    << Critical Junctures of the 70's to 80's:

    << Halleluiah 90's:

    Likewise, EW'ers know that Divergence Sell Signals do appear either at the iii-rd of the 3rd; the 3rd; the iii-rd of the 5th, or the 5th itself. Knowing which is which is far more an art than a science - many times. And specially this time around with SnP500 forming a very complex spiral meltup from the October 2011 higher low bottom.

    - Nobody can really know in advance if this rally off March 2009 will become 9 waves or 13 waves.

    If 9 waves, then the Aggressive Scenario for SnP500 should happen with a possibility of +/- 20% correction in the not so distant future. If 13 waves, then an Irrational Exuberance Rally should happen with a bear market correction being delayed much later rather than sooner.

    Thus, I remained steadfast to trading the trend on the short-term basis, avoid going contrarian until a definitive 1-2-3-4-5 rally has completed on the weekly, daily, and intraday charts; and also avoid
    swing trades and/or medium-term trades. But then, a possible Irrational Exuberance Rally might happen thus it is really more of the discretion of traders whether they will position for a possible multi-year rally or not at this stage.

    But then again; as traders it is always considered prudent to try short the markets if they actually perform a crappy (slow-grinding) A-B-C to the upside = after a strong run down. Unfortunately, only Compq and R2K went down hard while SnP500 and Dow Jones remained out of synch at comparatively much higher levels on the short-term basis. Making it far harder to go short the SnP500 while the Sectors Rotation is in earnest. If SnP500 refuses to go down significantly on the daily chart; shorting the other major indexes may prove a lot harder than contrarian traders would have liked.

    There really is no reliable or high probability analysis at this time hence the title 'Analysis Paralysis'.


    These are possible trade setups:

    - For the more nimble traders; as long as SnP500 does not go below 1790 then it is still a buy using a Bull Flag Pattern. Preferably waiting for it to break the lower channel creating a false breakdown then recovering back up. If unable to take position(s) at or near the bottom; then waiting for a strong intraday rally, then wait again for a minor intraday a-b-c correction (or Inverted Head and Shoulders) can be the better trading strategy.

    - For the purist EW'ers; there is no buy trade here. Short-term downside trade can be recommended for the more nimble EW'ers. Watch out for 'Dead Cat Bounce' and preferably go short a breakdown below the most recent low. Then trail it immediately with a stop loss.

    - For Swing Traders; perhaps buying tech ETFs (or other tech stocks) can be a better choice. Tests of Daily 200ma Supports are not to be taken lightly even for Compq and/or Russell2000. Far too many traders depend on them. Likewise, many investors are already learning to buy on discounts after waiting for a test of a 200ma that do not happen quite often during a bull run. Many could not endure several months of waiting and just kept buying the tech sectors in the past few months.

    For me: Some of my YM Trades trailing stops got stopped out with tiny profits. The rest have hard stops that resulted in modest losses as the vertical drop of April 10 was not highly expected. Without those stops, losses could have been 'badder'. I will be waiting for opportune time in Monday or Tuesday to make another trade. Possibly with half loads this time around as I do not have a high confidence TA and/or EWA. If SnP500 decides to keep going down; then waiting for a test of it's Daily 200ma and/or Weekly 50ma Supports should be the better trade setup. Perhaps even deploying my 10% cash (dry powder) toward a Swing Trade to the upside.

    Done: 11:25 pm.

    Apr 13 6:55 PM | Link | Comment!
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