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Stepping Stones

Dirty Harry proved good for pro-active traders who would rather shoot first and ask questions later. But that was short-lived.

<< Dirty Harry Trade:

Option #1 was to buy if SnP500 suddenly rally on next trading day. It was a good trade for proactive traders as Spx rallied hard the next day in expectation of the Draghi Put.

Not good since the Draghi Put was found wanting and the markets collapsed with such vengeance even Draghi himself had to cajole the markets the next day to 'save face'. Not anymore this time after a series of promises in the past.

Talk is cheap.

>> SnP500 Now:

>> Alternate View:

And we are back to bread-and-butter Potential Bull Flag with the 50% Fibonacci Retrace Support; the 127.2% and 138.2% Fibonacci Extension Buy Area; and the Dip Trip Support.

Alternate View is a potential 13 days of rally if the HUGE Potential Inverted Head and Shoulders Pattern persists for weeks and months ahead.

>> Intermediate Term:

I am using NYSE as the template for a potential 10 months rally for a blue v-th wave. Third Month and counting from the Sept 29th, 2015 c-wave low.


Trading Strategies:

There's not much choice for swing traders this time. If a potential bread-and-butter Bull Flag presents itself; SOP Trading Strategy is simply to buy at or near the Channel Support (blue channel line).

- For Zweig Breadth Thrust followers; this is the second chance to buy the dip after ZBT triggered last October 8, 2015.

- For those who believe the rally from August 24, 2015 bottom is a 1-2-3-4-5; then the Dip Trip Support is the 1-st wave. Sept 29 is the 2nd wave; the vertical strong rally in October = 3rd wave; and this most recent W-x-Y run down toward the Dip Trip Support is the 4th. Since the 3-rd is already extended (> 168.2% of 1-st); then the 5th should be more or less equal to the 1-st.

- For the bears; a breakdown of the Bull Flag must happen immediately.

- For the fastidiously bulls; if the Bull Flag breaks down much later on, then it will become a potential complex W-x-Y-x-Z even if SnP500 breaks well below the 138.2% Fibonacci Extension Level and thus would remain bullish.

- For the HUGE Inverted Head and Shoulders speculators; the Major Short-Term Support remains the most ideal buy entry in the weeks/months ahead.

- For those who believe the 'One-Day Green Day or Rally/Bounce Curse' that has been happening for SnP500, for more than a month already, is still fully intact; then perhaps waiting for at least two days of rally to break the 'Curse' is the better course of action before buying.

Stop loss is again highly discretionary for each type of trading strategy as inumerated above.

With the Christmas Season a traditional rally event; then it is not far fetch majority of traders and investors are just waiting for a bullish/bearish cue from the FOMC this week before acting.

Trade 'em or not let's have Happy Holidays for all.

* Suffice to say that I bought YM again today as an SOP Trading Strategy. If a rally happens in the next few weeks; then I would be selling half the positions with an assumption it is a 1-2-3-4-5 with the 5-th ~ 1-st then held on to the other half as a swing trade.

** I also bought YM last Dec 9 when Dow Jones and SnP500 tested their 50ma Support but it was a failed trade, that resulted in minor loses, as Spx bounced only for one day before going down again. Also bought SSO last Dec 9 and holding it as a swing trade.