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Performance Parameters

Dow Jones performed admirably so far from it's last significant bottom of 11,555 on intraday charts.  SnP500 is being hindered by the Financials and Compq has a potential Monkey Wrench in the form of $SOX.

There are so many possible intraday wavecounts including, but not exclusive, to a 1-2-3; 1-2-i-ii-iii-iv; 1-2-i-ii-1'-2'-3'-4'; 1-2-3-4-5; a-b-c X a-b-c X; or a simple A-B-C up.   That makes it imperative Test Parameters be streamlined at this stage.  These are some of the Performance Parameters so far:

-   img40.imagefra.me/i53t/aarc/141u_fcb_ubk...

-   img37.imagefra.me/i53t/aarc/141u_d8c_ubk...

-   img37.imagefra.me/i53t/aarc/141u_6ec_ubk...

By all indications, US equities are performing well, if not excellent, on the intraday charts with Compq still having some trouble getting it's acts together.

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These are the weekly and daily chart analysis:

-   img37.imagefra.me/i53m/aarc/141u_ccf_ubk...

-   img40.imagefra.me/i53t/aarc/141u_790_ubk...

The 5th wave for the current rally (from March 16, 2011) is expected to be similar to the Feb 5 to April 26, 2010 rally but  of a lower degree by a factor of 21%.   5th (of March 16 - Future) = 0.79x of 5th (of Feb-April 2010).

When comparing performances when trying to anticipate rallies and pullbacks using momentum indicators:  It is far better to use the Daily Chart for the Feb-April 2010 and the 240min Chart for the March 16 to Future since the 240min chart is approximately = 0.62x of the daily chart.  Not exactly 0.79x (which is the 309min chart) but the 240min chart is the one used by most traders for the highest timeframe for intraday chart analysis.  Use the 309min Chart if you must or want to.

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Obvious characteristics of Feb-April 2010 rally were:

-  Pullbacks on the 1st wave was the deepest with subsequent pullbacks for the i- and iii-waves not exceeding 50% for those legs.  I expect the same should happen for the 5th wave of March 16 to Future since pullbacks tend to become shallower and shallower as the wavecount progresses from 1 to 5;

-  There were lots of Divergence Sell Signals during the Feb-April 2010 rally that the bears love to trade but proved to be their undoing;

-  Volume traded was pathetically lower as the progression of 1-2-3-4-5 rally from March 6, 2009 finalized to the 5th wave of Feb-April 2010.  That was the expected volume performance since market participants become less and less willing to support a strong rally (for whatever bearish reasons they can find) and the 5th wave turned out to be the shortest wave.  This particular indicator was the main reason why the bears were too confident trying to short the markets from Feb to April 2010 using the divergence sell signals during the early stages of the rally but later they practically stopped shorting the markets (less than 27.2% pullback for the iv-th wave) when they got burned multiple times.

-   img40.imagefra.me/i53t/aarc/141u_a4b_ubk...

-   img40.imagefra.me/i53t/aarc/141u_1c1_ubk...

-   img37.imagefra.me/i53t/aarc/141u_959_ubk...

I expect the March 16, 2011 to Future Rally for the 5th wave (of the 3 or C wave on weekly chart) will practically be the same as that of the Feb-March 2010 since the former is also supposed to be the shortest wave of a 1-2-3-4-5 rally.

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Notes: 

I bought additional YM position early this morning when Compq tested it's Bull Flag Upper Trendline Support.  Lost 17 YM points/contract on the first try but the second buy entry proved very successful.  Now trailing YM with stops to protect paper profits.

One way to keep trend trading the current rally, using intraday charts, is to keep buying the dips and selling at potential divergence short signals. 

Also possible to pyramid the positions as the rally unfolds by buying several positions on dips and selling only a portion of the buys on potential divergence sell signals while trailing the others with tight stops not expecting more than 50% - 61.8% retrace of each leg up (a little more than 50% retrace is ok but more than 61.8% retrace of the most recent leg up could easily mean a Major Pullback or the Reversal of the Trend). 

As usual, the first lower degree i-ii-iii-iv-v or 1-2-3-4-5 on the intraday chart (by using the 60min to 120min for this case) will be considered as the 1st of a higher degree 1-2-3-4-5 rally for the Daily Chart that starts from March 16, 2011 bottom - IF and WHEN an obviously recognizable impulsive pattern does form in the next several days - but of no more than 2 weeks duration from today.

I expect Dow Jones is now a lower degree 1-2-3-4 with 5th in progress;  SnP500 a 1-2-i-ii-1'-2'-3'-4' with minute 5' of iii in progress; and Compq a 1-2-i-ii-iii-iv with the v-th of 3rd in progress on their 60min charts using or following the EW Rules not allowing any corrective wave to overlap any impulsive wave. 

-   img37.imagefra.me/i53t/aarc/141u_910_ubk...

No need to illustrate all since there is no common ground to make intelligent decision(s).  Trading for the next several days (or weeks) will depend more on how effective traders will be with their Trade Management.

I don't know how they will reconcile their wavecount differences but the usual result was either they go into a vertically strong rally or a somewhat crippling sell-off in order for them to reset their wavecounts into a more manageable common pattern - OR they do what they did from Feb 5 to April 26, 2010 by just keep on rallying while EW practioners kept on guessing what the highest probability wavecount would be until the very last moment (a few days before April 26 top).