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The DAX Factor

I kept thinking of shorting the ES futures in order to daytrade a possible C-wave down based on the previous Instablog as SnP500 approaches the Double Top Resistance of 1293 printed last Oct 27 and possibly the 1306/1308 Fibo Confluence Resistance level.

However, ES kept forming intraday patterns that can support a more complex meltup scenario and SnP500 was able to form a potential Running Correction that can enable it to have a strong intraday rally toward the 1400 level despite the shallow intraday pullback:

ES is still a potential good divergence short once it makes a minor higher high on the 24-hr 240min chart in the 1294 to 1296 area.  Spx is also sporting potential intraday divergence sell signals for those who want to go short using a 3 pushes up (this type of potential 3 pushes up is less suitable for high confidence short setup since the channeling can become an expanding triangle later on.  At least the ES futures can be protected against possible over-night gap up that stocks/ETFs can't.

The DAX had been preventing a rally by the SnP500 for the past 4 trading days and has a much better price pattern that can easily be understood:


US stock markets are still beholden to the European Dept Crisis but at much lesser degree as attested by DAX going down consecutively during the last 4 trading days while SnP500 and Dow Jones simply formed a flat and triangle combination (when viewed on the 30min chart)  = refusing to follow DAX and/or the Euro$ as the latter two plummetted down on intraday charts

However, when DAX made a rally early today;  After-hours traders took the opportunity to drive the e-minis into a frenzied rally while the US cash markets were still sleeping resulting into massive gap ups at the US open.

Therefore:  If DAX goes into an extended 5th wave rally;  the SnP500 will have a better chance of being able to reach the 1400 level with a Running Correction 2nd wave. 

The Euro$ is a possible divergence buy that triggered today.  However, Euro$ is still quite iffy since there is still a good possibility of further minor run downs before a complex 1-2-3-4-5 run can be completed from the 1.3223 level.

I sold some SSO Swing Trades today at or near the 1293 double top resistance and will sell a little more at the 1306/08 as indicated on the previous Instablog = to cover my expenses.  Also sold half the YM Dec 19 buys and will try to keep holding the other half just in case SnP500 goes straight to the 1420 target for the daily chart and/or the 1594/1794 upper targets for the weekly/monthly charts.  At the moment, caution is the better part of valor.

Still holding half the NQ buys of Nov 25.  NQ is now trading above the Oct 2007 high and is close to breaking above the July 2011 top when viewed on the monthly chart.  That makes a strong breakout above the 2435 level a high probability due to this particular price pattern.  Thus, I am very much reluctant to liquidate this other half of long position and instead will just roll it over every quarter if the wide trailing stops can survive the occational pullbacks in the days, weeks, and months ahead.  Apple practically controls NQ.  Since AAPL has a target of 500+ on the daily and monthly charts;  that could be the good place to sell the other half of NQ Nov 25 Trade.  See latest Comment for AAPL TA and upside targets.

For those who bought stocks/ETFs and or futures contracts at the bottom calls of August 9, Oct 4 and/or the bottom call of Nov 23/29, 2011;  the rewards of possibly making considerable profits from those Swing Trade positions is so massive this time around.  That is, IF SnP500 actually rallies to the 1794 target (measured from the July 2010 bottom) using the monthly chart.  Or at least the 1420 target for a complete i-ii-iii-iv-v rally measured from the Nov 25 bottom using the daily chart.  1594 is the complex 1-2-3-4-5 rally target measured from the Oct 4th bottom.

I use trailing stops on the August, October, and November buys just in case something really bad actually happens in the near future.