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Looking for True Color

Wavecount for the SnP500 can be interpreted several ways thus it is now in a Gray Area.  Since I am long SSO from the $53.12;  better to show how the bears are possibly interpreting the wavecounts:


Know thy enemy better than yourself.

SnP500 made a 1-2-i-ii-iii-iv-v-3-4-5 rally on the 15min chart and is now reacting to the 1344 Major Short-term Resistance.  ES, likewise, reacts well with the downtrendline resistance on the 240min chart:


SnP500 will have to show it's true color within the next few days or at most by late next week. 

It is still a good follow-up buy if it reluctantly goes down toward the Major Intraday Support of 1329.16 or if it forms a Flat sideways a-b-c corrective pattern on the 15min chart that may last a day or two.  Also, the 1-2-i-ii-iii-iv-v-3-4-5 is less likely a C-wave or an A-wave up since it was able to subdivide the 3rd wave convincingly making it more of an impulsive intraday 15min rally rather than that of a C-wave for the 60min chart.  But then again, better be careful than sorry just in case some bad news hit unexpectedly.

Dow Jones is still the shining star:


Dow Jones is the last best hope since both SnP500 and Compq went below their Feb 18 high during the last 12 trading days.  But then again, the 11 days of Flat Pattern run down from May 2 highs complement very well with their 8 days of run down during the April 6 to April 18 Zigzag Pattern thus qualifying it as a iv-th wave that overlaps the i-st wave.  Thus, IF SnP500 and Compq make nominal higher highs on their daily charts; the i-ii-iii-iv-v rally will be considered corrective rather than impulsive.   SnP500 will have to rally far above 1394 to convert a possible corrective i-ii-iii-iv-v rally into a 1-2-i-ii-iii rally measured from the March 16 low of 1249.  For now, far better to wait and watch first how the intraday wavecount will work for either the bulls or the bears.

This type of trading is not suitable for the tyro traders since they are more prone to being whipsawed by the markets.   Many traders are just waiting for the QE2 to end in June and will again wait for the reaction after that before making medium- to long-term trade decisions.

I still think SnP500 is now too close to the 1385 Major Resistance on the monthly chart not to test it immediately within the next few weeks before deciding what to do next.

I sold half of SSO (bought last Monday at $53.12) at $54.94 before the open.  Also sold YM before the open and might buy it again if it makes a reluctant a-b-c run down on the 24-hr 30min chart.  I still keep 2/3 of the SSO buys from the March 16  April 18 bottom just in case SnP500 actually rallies toward the 1475 Nominal Target.

I keep trading the trend (with small positions) to keep up with the market developments and possibly make some profits in the process.  Otherwise, more likely my portfolio might unnecessarily suffer later if I neglect analyzing the day-to-day price actions at these critical times.


Euro$ is re-testing the broken daily chart 50ma support which is now acting as a major resistance. 

IF the Euro$ can rally above that resistance, then it still got a good chance to finalize a potential 1-2-3-4-5 rally on the weekly chart with target in the 1.506 to 1.534 Nominal Range  measured from the 1.287 low of Jan 2011.  Major Resistance on the weekly chart is 1.514.

Traders tend to buy or short the equity markets these days based on the performance of the US$.  The US$ performance is inversely correlated with the Euro$ to a greater extent.  Easier to analyze the Euro$ since it is a pure form rather than the US$ which is pegged against a basket of currencies.