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Trick Shot

Dow Jones and SnP500 are now undergoing a selloff either that of an A-B-C ;  a 1-2-3; or a 1-2-i-ii-1'-2'-3' down depending on how to interpret the intraday wavecount and/or how the markets will perform tomorrow.

This was my interpretation of the bearish count, as of May 19, adhering to the extended rule of counting b-waves that are considered to consume more time than a-waves and c-waves and are therefore more complex in nature:


As of today, the 3 or C wave is in progress. 

First things first:  A C-wave will have to be assumed first and if the A-B-C run down wavecount failed, then a 1-2-3 will have to be entertained later. 

The C-wave down may or may not be completed already depending on which index to count and how to interpret the C-wave on the 15min chart.  For the Dow Jones, the C-wave down may be able to have a truncated v-th down and a rally should follow tomorrow.  For the SnP500, the C-wave down is still in progress with a v-th wave for the C-wave Nominal Target of 1307.57 and a Maximum Allowed run rate of 1297.58.  IF SnP500 goes straight down much more than 1297.58, then it is supposed to morph into a Spiral Meltdown.  So, for trading purposes, a hard stop below 1297.58 should be considered if considering buying the dip on this particular case.

The performance of the main indexes is dependent more on what happens to the US$ and to a greater extent the Euro$:


The Euro$ is a Potential Head and Shoulders with a Conventional Target of 1.3225 to the downside.  HnS usually have 60-65% success rate.   But then again;  there is alwasy a 35-40% potential failure rate.   As of today, Euro$ is bouncing off the potential necline support.  A rally tomorrow could result in the US main indexes to rally too while a Euro$ breakdown below the Neckline support could result in the US main indexes to go into a Spiral Meltdown Scenario.

I sold the last half of SSO yesterday (bought at $53.12) before the open at $52.70 for a minor loss.  Over-all, a small profit since the other half was sold at $54.94.  The NQ Intrepid Trade trailing stop got stopped out before the open with a small profit.  The YM Intrepid Trade was sold at almost 100% profit potential since it was bought at the bottom and sold at practically the top of the intraday runs.

Considering again an intrepid buy trade either tonight or tomorrow for the YM and/or NQ.  Will try to gauge how the SnP500 will perform tomorrow before deciding either to buy or not the SSO for a minor swing trade with target pegged against the Major Resistance of 1385 of the SnP500 on the monthly chart.

Again, this trade setup is not suitable for tyros since there are far too many possible scenarios on the daily, weekly, and intraday charts that can easily whipsaw even the professional traders.  Make sure to have hard stops (not mental stops) if considering buying the dip this time around since the probability of trend trade success is much lower at this stage of the rally since it started in July/August lows.  At this stage, intraday scalping is more an appropriate trade method but that is considered among the hardest, if not the hardest, way of trading.

Wednesday 3:00 pm Udate:

SnP500 was able to make an attempted recovery rally today:

The vertical drop for the iii-rd wave down is the usual glaringly obvious indication of a C-wave down (see 60min chart re-posted yesterday).

If the wavecount is correct, then a rally should follow for at least the next few trading days (and into next week) if there is no bad news bad enought to cause another intraday meltdown.

The wavecount price structure is still not convincingly complete but is acceptable as far as usual run rates for a 1-2-i-ii-iii-iv-v-3-4-5 run down is concerned with a weak 5th wave.

I was able to buy YM at 12,240 during the over-night session and bought some SSO at $52.53 early in the morning.  Will add NQ and/or some more SSO if the next run down (perhaps after testing the Major Resistance of 1329) goes reluctantly A-B-C down.