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Balancing Act

SnP500 is now trying to seek Equilibrium on the weekly chart:


But the bulls have a definitive momentum edge with potential zero-line and signal-line cross-over rejects.  Target is measured 2x of the downswing which is 1219 if the cross-over reject momentum build-up works.

Added to that is the multiple Head and Shoulders on the weekly chart that kept failing since May and the Inverted Head and Shoulders on the daily chart gave the bulls additional advantage once that Right Shoulder Resistance got taken out with force.   Target is 2x the measured right shoulder price range which is 1251 on an HnS Right Shoulder Resistance failure.  The daily chart Inverted Head and Shoulders has a target of 1250 for the bulls.

On the downside is the weekly HnS itself has a target of 832 if it works.

Likewise, an equal move target of 952 is on the table IF the current wavecount is an A-down B-up to be followed by a C-wave down.   Or a 1-2-3-4-5 target of 773 IF the wavecount is a 1-down 2-up at current form (since April 26, 2010).

Daily and Intraday Charts are mixed with multiple possible interpretations.  Thus it is very hard to make a high-probability analysis using Elliott Waves.

Major resistance is at the 1154 area (once 1131 got taken out) and the major support at the 1040 area (if Spx decides to make another pullback down).

My expectation is that the Grinder Scenario is starting to make sense since the initial pattern formations and retracement levels have been met (on the daily chart since July 1st):


The weekly chart will require more time to confirm the existence of the b-wave since the b-wave itself is the most time-consuming part of an a-b-c process.  How far up the b-wave will go is highly unpredictable at this stage.  It can go as high as 1300 or get clipped right here at the last high of 1131.46 for the a-wave of a lower degree a-b-c process.

I was able to raise 10% Cash from my Portfolio and starting to accumulate SDS just in case we go down.  Still got 1/3 SSO holdings bought at the August lows as a swing trade just in case we go much higher.

For now;  I trade YM for scalps and daytrades (for daily/weekly expenses) and  trade the ES for daytrades and swing trades (for profits accumulation).

Since I expect the US stock markets will be range-bound for at least another year; my investing strategy is to trade the SSO and FAS for "freebie shares" (i.e., buy 5 positions of FAS then sell 4 at 20-30% rally keeping 1 position as a free investment;  buy 10 positions of SSO then sell 9 at 10-15% rally keeping 1 position as capital-free long-term investment).   Always buy SSO and/or FAS at the bottom or lower ranges.  Later, once the c- or C-wave has been achieved (952 area or lower);  then go for dividend stocks at much lower prices. 

I can use YM and/or ES to chase rallies and sell-offs, if necessary.  Also I use SDS (and FAZ later, perhaps) to protect a portion of my portfolio just in case we go into an early meltdown mode.