An impulsive 1-2-3-4-5 intermediate rally was expected in April 13 --- further updated last May 15 and May 28:
<< SnP500 April 13 Trade Entry Setup: g10.picoodle.com/ltd/img10/4/4/13/jquint...
<< May 15 Intraday EWA: g15.picoodle.com/ltd/img15/8/5/15/jquint...
<< May 28 Update: g15.picoodle.com/ltd/img15/1/5/27/jquint...
Nominal Target was 2003 with an upper range of 2047 using the May 15 update.
SnP500 rallies above the 1961 which was the maximum allowed run up for the Ending Diagonal (or Terminal Triangle) to remain valid as illustrated on my Comment of June 13:
<< SnP500 Consolidation Phases: http://bit.ly/SG5UGB
The Terminal Triangle Scenario was invalidated that sets the stage for the strong rally late last week.
Right now, high probability conservative scenario is that the 3rd wave failed to become an extended wave:
>> SnP500 Right Now: img10.imagefra.me/i876/jquint84/141u_164...
This in turn qualifies the 5th to become the longest and/or extended wave with a Nominal Target of 2015 and a potential Extended Target Range of 2059 with Upper Limit if 2129.
* An Spiral Meltup of 1-2-i-ii-iii-iv-v-3-4-5 is the aggressive scenario, with a good possibility = as SnP500 consolidated for 16 days in March/April with only 13 days of extremely shallow higher high higher low consolidation range last June. Usually, a 4th wave would consume 1.27x to 1.62x of the 2nd when the 4th becomes shallow specially with higher highs higher lows patterns. A spiral meltup could be the higher probability if the consolidation range of June, 2014 was = or < 8 days. Unfortunately, with 13 days consolidation range; it is better to be more conservative rather than be aggressive for this particular swing trade.
On the 30min chart a minor complex i-ii-1-2-3-4-5-iii-iv-v is in progress from the June 26 bottom with 1997 Nominal Target and an Upper Range of 2010.
>> SnP500 Intraday EWA: img10.imagefra.me/i777/jquint84/141u_313...
Whether this will become the i-st wave of the blue 5th on the daily or the blue 5th itself remains to be seen.
Dow Jones has a different pattern from SnP500 since May 2013 and a 'Running Correction' was emphasized on the daily chart:
>> Dow Jones Daily Chart EWA: img15.imagefra.me/i976/jquint84/141u_5d6...
The aggressive wavecount for Dow Jones is more for the uber-Bulls.
Another interpretation is that the consolidation range from Jan 2 to June 20 2014 is actually a Triangle which is what majority of traders, who specialize in pattern recognition, would assume - at least for Dow Jones and much less so for SnP500.
But then, better take these highly bifurcated markets one step at a time. After all, finding tops is far much harder than finding bottoms.
I enumerated several follow-thru trading strategies for the four major indexes in the last Instablog for their respective swing trades.
Four major indexes = four different patterns = four different strategies.
The strategies proved successful thus the primary objective was/is to take profits ... and ... possibly maximize paper profit potentials by trailing them with protective stops.
SnP500 is the heavyweight index and therefore it is better to concentrate on how it will perform in the days/weeks ahead as the 5th wave unfolds. Unfortunately, the 3rd failed to become extended thus it becomes extremely hard to know, beforehand, how the 5th will perform as the trading range for a potential extended 5th is extremely wide:
- If the 5th wave goes into extended rally then the profit potential can become massively rewarding on the short-term basis;
- An extended 5th wave seldom happens; thus if the 5th failed to become the longest and/or extended then a sudden major pullback - or worse - a Trend Reversal is definitely counter-productive for the bulls on the medium-term basis.
SOP Trading Strategies are the following:
1. Tighten trailing stops as SnP500 approaches it's 2015 Nominal Target. Intraday Nominal Target is 1997;
2. Close most, if not all, trades at or near the Nominal Target(s);
3. For a potential extended 5th wave; it is traders' discretion whether to keep maximizing profits by using trailing stops on majority of positions or simply close most, if not all, swing trade positions. 50-50 can be a halfway mark;
4. A retracement of > 61.8% of the potential 5th wave results in the completion of the 1-2-3-4-5 rally in majority of cases;
5. Obviously, a run down that touches or breaks below th 4th wave bottom confirms the 1-2-3-4-5 rally has already completed.
- I let the YM and NQ swing trades expire in June 20 and decided not to roll them up;
- I will be closing the TNA swing trade as SnP500 approaches it's basic 2,003 nominal target stated in May 15 and/or as Russell2000 struggles against it's Double Top Resistance of 1212.82 on the daily chart;
- Will try to maximize profits on the SSO swing trade using tighter trailing stops.
- Might try to make a new Daytrade if a viable pullback down happens that can possibly support an extended 5th wave rally, for the SnP500, in the days/weeks ahead.
Compq is a potential Spiral Meltup on the daily chart. Thus, it has a very good chance the 1-2-3-4-5 swing trade Nominal Target of 4498 and Upper Range Target of 4641 (measured from the April 15 bottom) can be exceeded far more than expected if Compq transforms into a complex i-ii-1-2-3-4-5-iii-iv-v rally. But right now; 4487 and 4537 are the usual Fibonacci Extension Trend Reversal Resistance Range on the daily chart. Thus, caution is being called for just-in-case it actually works for the contrarian bears.
For the medium-term:
<< SnP500 Medium-Term Trade Setup: g14.picoodle.com/ltd/img14/5/11/20/aarc/...
>> SnP500 NOW: img15.imagefra.me/i476/jquint84/141u_a60...
The minimum target of 1973 for the blue 5th has already been achieved thus SOP Trading Strategy is to tighten trailing stops just in case a sudden trend reversal happens.
2143 Nominal Target for a Complex Spiral Meltup remains viable with a potential Upper Range Target of 2390 as of November 2012.
Success of maximizing profit potentials depends more on the experience and skills of individual traders. With a very complex rally of possibly 13-waves (from October 4, 2011 bottom) success of finding the topmost run can be daunting if not almost impossible for the majority of traders.
At this stage it is prudent to start expecting a Major Correction is going to happen sooner rather than later. Thus, it is now practical to start the necessary mental preparations of possibly counter-trading the uptrend (for the medium-term Contrarian Bears).
* For Daytraders and Swing Traders = The Uptrend remains a Friend until it is no more. So ... 'Let the Sunshine In' ... while it lasts.