“Those who have knowledge don’t predict. Those who predict don’t have knowledge.” Lao Tzu, Chinese philosopher, 6th century BC

PAYPAL

Monday 29 February 2016

29 Feb 2016 - Bearish Monthly

As the saying goes for this blog "The monthly trend will last for months to years".  This trend is true to form and has closed this month on a consistently bearish note since Dec. 2015 regardless of the rally the markets has had recently.  The candle has closed above its lower BB line which is not considered at an extreme, and so we should watch now the 75 month MA sitting at 1577.95, we can see that it has found the level where the 2000 and 2007 topped out.  This level is now the support to consider with a possible 1600 major support by the time price meets with the moving average.  I would gather that it would have to move sooner than later or the monthly moving average would be at risk to overthrow these tops as the months passes..  Below this level is the 200 month MA which sits at 1338.75 currently, so we would need to watch the 1400 level as price has found significant support / resistance here.

While the ST and PA is still biased to the upside, the risk of an acceleration down is still low but not impossible.  Remember that these rallies we have in the markets is what I consider an up trend in a bearish market.  We won't know how much on edge the market is in until we see the volatility become erratic.  My hope is I can be able to tell you before the market makes its move.  With prices still in OB territory I would say that the bulls are safe for the time being, and as some analyst have said, "this might be a good time to reduce exposure in a down turning market".

SEN: Bearish
ST: UP
PA: UP

Impressive as the down turn has been the past two days, we should not jump the gun on any short entry.  We do not have a confirmed signal from the ST and PA, at least not tonight.  Perhaps tomorrow might be a different story.





Friday 26 February 2016

26 Feb 2016 - Stalled But Nothing's Changed

I have updated the trend line (Blue Dotted) to reflect that of the daily trend line for the 60 min. chart.  As we push further into mid-year, we can clearly see that the 200 day MA inching lower as well.  From my experience the 200 avg. always gets hit at the right time when it has landed within a zone of significant support/ressitance.  We might not hit the 200 MA in price, but it certainly will try.  Since we are in that range now (looking across the chart for lows and highs).  I would say that the range could extend down to as ow as the 1990 area which is close to the 61.8% ret. and the 2nd level (Blue Dotted) trend line.

We should look to see if we get some sort of diagonal trending triangle into these resistance.  If we replace the 4th wave (Blue) with a b-wave instead and the 3rd wave (Blue) with an a-wave, then a c-wave (Blue) would extend in around where the 200 day MA is sitting at right at the moment.  Coincidence?  Remember that the 200 day is trending lower so where a=c (Red) is concerned, price might just arrive at the 2013 SPX by the time the 200 day also arrives at this point.

SEN: Bearish
ST: UP
PA: UP


Thursday 25 February 2016

25 Feb 2016 - Another Fast Moving Day

Acceleration extraordinaire with the last minutes of closing.  Crazy is what I call it, and although I could say that it is somewhat manipulated, I have more belief that this is just part of the cycle we are in.  Unfortunately, I am not an expert or claim to be an expert on cycles.  What I do know is that we are still in that "Acceleration Up" phase, and it could just keep running and it won't matter what your cycle says. What this blog is all about is the risk and probability factor.

I am tracking the resistance angle (blue dotted line) for the past few weeks as the likely stall point for prices in the SPX, but this is just a guide.  While we have arrived, the signal still suggest a risk for acceleration.  Therefore, we would need a confirmation of a down-turn before entering short or exiting long positions.  So either we can remove the signal from an OB scenario to start a short or to liquidate longs, or we can look for the intra-day charts to at least be in the bearish and OS camp.

SEN: Bearish
ST: UP
PA: UP


Wednesday 24 February 2016

24 Feb 2016 - 2000 The Odyssey?

So is this the start of C-wave to the 2000 range?  The impulsive move today right after the lows has shown an eagerness to push beyond reason.  While many have been left scratching their heads wondering where this rally came from, we have analyzed this rally as a possible scenario.  It is also why we do not trade anything counter trending when signals are in OB/OS territory.  In this case OB.

Many including me were fooled today into thinking that a great chance the rally is over, only to be told by my signal "I told you so".  The reason for this is how far down prices achieved this morning, and how much shallower my anticipation of a low would be before a rally.  The signal is still up trending at this moment so shorts should just wait it out and be patient.

SEN: Bearish
ST: UP
PA: UP


Tuesday 23 February 2016

23 Feb 2016 - Two Minds Don't Think Alike

Looking at the chart below doesn't really clear things up in terms of EW counts.  Since I am counting this move up from the Feb. 11 lows as corrective, it would be normal to see the chart filled with abc's and d's and e's.  But the count up from the lows can also be a 5 wave move which is not shown here.

While the signals for the SPX is still up trending and in OB territory, the ES however is at a bearish position already.  1980-1990 SPX would be the range where price could possibly meet with the daily 75 MA and the Gann angle resistance.  This would push us into March as a possible high.  We can't really speculate here as both ES and SPX are not in SYNC with each other.  If I were to have a bearish tone for the immediate turn, it would have to be because of the H&S pattern forming since Aug. 2015.


We will have to wait for tomorrow to see if both the futures and cash market can finally agree with each other.

SEN: Bearish
ST: UP
PA: UP


Monday 22 February 2016

22 Feb 2016 - Missing A Leg

Looking at the 60min chart, I can see if my eyes do not deceive me that there is still another leg higher missing to complete this move, and it might push towards the 50% ret.  With any W2 (If this is one) prices can extend to the start of the initial wave, so for price to push towards 2115 is all intents and purposes still possible.  Be advise though that if a leg down is the count of W3 or W-C, then trading the long side could be a potential bull trap.

SEN: Bearish
ST: UP
PA: UP

Last blog called for an acceleration UP "risk"..  and it has come true to form.  There is a negative divergence developing in the intra-chart so the top could happen soon.  I am still looking for at least another leg up to have a complete form of a 5 wave structure though and perhaps tomorrow will see that through.


Friday 19 February 2016

19 Feb 2016 - Correct Correction

The SPX has pushed lower to touch the high end of my corrective range.  However, I cannot say that the push lower is over and that we should rally past this weeks high.  Many are looking for a price rise into next week, and while dates vary they all do look for a high to be in place.  Im inclined to see price move near 1980-1970 (near 75 day MA), but that is too far away to speculate on.

ST still remains on the Up and Up, perhaps accelerating since the signals have entered the OB range.

This weeks rally is indeed an impulse probable for a wave-c.  Whether a destination for a wave 2 is still to be determined.  Remember that we do not need to make a 3 wave pattern to call it a c-wave.  In fact, we could well be close to a high as soon as early in the week and push down really hard.

SEN: Bearish
ST: UP
PA: UP


Thursday 18 February 2016

18 Feb 2016 - Timely Break?

the 38.2% ret. seems to be holding and has managed to push the signal out of OB.  This should keep things paused for a breather, but an entrance back above the OB range will see prices move higher with a probable 1950 - 1960 target.  It is possible that the SPX will try and tag the 1900-1890 again before a resumption higher.  This is the Gann angle line I am keeping an eye on.  A break of this could be the sign that the trend has changed back to the downtrend.

SEN: Bearish
ST: UP
PA: NA


Wednesday 17 February 2016

17 Feb 2016 - Follow The Signs

I did say the last couple of blogs ago that we should disregard any rise in the markets because the risk is still to the downside, and while you could be scratching your head thinking "Is he kidding?", there is a good explanation that I will reiterate again for you.  We need facts, and confirmation.  For me, this has not shown up even with this large rally the past few days.  Yes, it is impressive but it was expected and my long-term has not changed its tone.  We have been OB for a couple of days now and it is not surprising to see an accelerated price to the upside.  However, my sentiment is still bearish, and also OS.  This means that this move can be labelled as an uptrend in a bearish market.  If the Sentiments changes, I will also change my views.  As of right now though, I will trade bias to the highest possibility of a successful trade.

If we are looking at a count for this move, we could be just on a sub wave (a) of c (red).

Anyone long should exit their longs if the intra-day signals pushes out of OB. Anyone looking to short should start looking at signals entering the bearish position in your indicators (whatever you use).  Price is now at a 38.2% ret.  While it is just a suggestion that wave 2 (pink) would see the 50% ret. resistance, it is possible that wave 2 could extend higher.  There is no real certainty that the count is even right, but this would be based on EW theory analysis.  Signals are still preferred here any given day.

SEN: Bearish
ST: UP
PA: UP


If you need anymore convincing of why I think you should not trade even the good rallies at this point, just look below, and see where the danger lies (Rose coloured glasses? Or Bloody glasses?)  Just depends on how you interpret things.



Tuesday 16 February 2016

16 Feb 2016 - Market Gets Valentine Love

As the last post stated, the signal is OB and could push impulsively.  It doesn't matter what we think, in the end our biases will get the best of us.  The intra-charts sported an OB signal all day and the proof is in the 30+ pt. in the SPX.  I do believe this rise is due to the Option Expiration happening this Friday.  Therefore I am expecting this rally to at least last till the end of the week.

SEN: Bearish
ST: UP
PA: UP


Friday 12 February 2016

12 Feb 2016 - Good Turn

The confirmation came today for the positive divergence I saw yesterday.  The incline up throughout the day was choppy at best, but still managed good gains.  While I did see it as still a corrective move, the signals this morning showed an OB environment which caused our extended run up.  Corrections do travel impulsively as well.  This is why we need the signal to show us an exit point regardless if the price movement behaves like a correction.  Never take anything for granted, as wave counting or pattern recognition is never a sure thing.  Signals however are, regardless if it's temporary or prolonged.

SEN: Bearish
ST: UP
PA: NA

The ST has turned up yet the sentiment is still "Bearish", so I would classify this as an up trending on a bearish market, and this can also be confirmed with our weekly chart showing a print to the downside.  Therefore any surprise risk is always higher to the downside.


Thursday 11 February 2016

11 Feb 2016 - Positive Divergence

There is a positive divergence happening on the daily chart which could be a clue for an eventual turn up if it hasn't happened already.  But this should be a cautionary setup since we are in OS territory, My plan of attack for myself is to let the rally do its thing, and sit it out.  I know some will have that itch to trade for a potential burst up.  This from my experience has never been a good plan since it is a counter trend trade.  In a normal day where signals are bullish or on an uptrend, you can say that trading the short term move up might reap benefits.  But in this case, we are faced with risk of downward acceleration and run-away gaps.  This leaves many not ready for the scenario I just mentioned and have not thought about which levels to cut their losses at unless you have an auto stop-loss set up, but this also is no use if prices gaps down below your cut loss level.

Below you will see on the 5 min. chart what our trend is and where these acceleration and gaps occur.



We might be turning by tomorrow, and the pos. divergence could be a true signal, but we need the ST and PA signals to confirm this, and avoid potentially losing out on some short profits for those who are short the market.

SEN: BEARISH
ST: DOWN
PA: DOWN

If those new to my blog, want to know how reliable our signals are.. Just look to the right side pane of this blog and you will see when our signal turned "Bearish".  Trading bearish from that time on without trading the corrective rallies would have made you a good chunk of change.




Wednesday 10 February 2016

10 Feb 2016 - Tap Out

Looks like prices for SPX tagged our Gann angle then proceeded to reverse the rest of the day.  This price rise has a few implications in that we tested resistance with no break through to the upside. Secondly, this resistance also tapped the 38.2% ret. meeting the minimum at the least of pull back of wave-a (red).

Yesterdays sentiment that these past few days has been liking to a corrective feel is an understatement.  I read yesterday on a tweet sent out and is what I think separates good traders to bad ones.

"Most times, OS conditions are opportunities one can have in the market, but in a Bear Market, this sentiment "never" works".

There is a reason this statement resonates for me the most, and what this blog is all about.  Since this blog started, I have emphasized the importance of these OB/OS conditions and how to use them to the most potential.  Not only are these good at recognizing extremes, but with the right mindset, we can also see where the trend is at.  I may on occasion show other indicators and how they behave, but this blog is about simplicity, and this quote reflect that technique we use and the results we are after.

We do not know what will come out of the FEDs mouth in the coming days, but if we know what happens after then we are able to plan and conclude if the words were bullish or bearish to the market before a long move occurs and you either entered later or exited too late.

As it stands, the ST has not moved from its downward direction, so this is the direction we must follow.  The intra-chart is also downward but in a bullish phase so we should look for signal to continue downward tomorrow into a bearish phase for prices to continue lower and perhaps to a LL.  The immediate target is for 1800, but will depend on how impulsive and OS we are at this point.

SEN: Bearish
ST: DOWN
PA: DOWN

Note: Perhaps the inability of price to push up strong is because of our Price Acceleration sentiment  to the downward position.  This would have to be a study on its own, but it's an undeniable conclusion by eye.





Tuesday 9 February 2016

9 Feb 2016 - Rock Or Roll?

ES chart is suggesting a corrective pattern setting up these couple of trading days.  So the risk is still to the downside.  Also the SPX has now closed 2 consecutive days under our last Gann angle.  The move here could be consequential due to the fact that this angle rises everyday and is now considered a resistance level.  The level to watch is 1800, 1780, 1750.

SEN: Bearish
ST: DOWN
PA: DOWN


Note: While signals on a longer-term basis is not OS, it is however closing in on the range.  This has the potential for a run-a way move.  Can I guarantee this? No, but I am merely warning of the risk for one.  So that wave-2 (pink) will be the count that could ultimately start the cascade downward.  If we move lower from today, then the likely hood of the wave 2 (pink) is nullified or just postponed..

Monday 8 February 2016

8 Feb 2016 - Tag Team

The Bulls and Bears might be playing us for fools..  The push lower into OS territory in the intra-charts triggered a impulsive momentum while the end of the day saw us push up with the same impulsive manner.  The one thing different is that regardless of the push up, signals still kept its OS range and downside sentiment.  

The option of the a-b-c wave count in red is still pretty much alive as we revise the bottom.  Every time we do, we see the two potential rally target hitting significant rally levels, which makes it harder to tell if these targets are legit or an illusion.  The only thing that nullifies these pattern and count is if we get at the least a 5 wave decline, but a LL price would make the count more complex in that it could be counted as a complete 5 wave decline from the Nov. highs, or that the LL is the end of a smaller 1st wave.  Both will have a similar reaction.. A rally.  While the first option would have us going back higher to our 50% to 61.8% ret. targets for a 2nd wave or a shallow rally opined for the second option of a smaller sub-wave 1.

So the example above of EW counting is in itself an art, it does present some complex analysis.  So lets stick to the simple but true indicators.

SEN: Bearish
ST: DOWN
PA: DOWN


Friday 5 February 2016

5 Feb 2016 - Closed On Gann Support

Price is at support and a break of this would have us push perhaps to a new LL.  I do not have any idea of the news that will come out of the weekend but this coming weekend is the Chinese New Year, so I'm not sure if any bad news or any news will be coming out of that side of the world.  Wave-c (red) to 61.8% ret. is still in play, but the ST Down is holding pretty well since the signal.

The weekly closing bar is negative, and should sway it down next week unless we have a surprisingly good news before the market opens next week.  This should be good for the Bears as the market is still biased to their case.

SEN: Bearish
ST: DOWN
PA: DOWN



Thursday 4 February 2016

4 Feb 2016 - Life Is About Ups And Downs

Markets are unsure of the direction it needs or wants to go.  The perfect time to use indicators that guide your general trend would be now. As I indicated yesterday, markets are harder to trade when signals are not in SYNC.  What we got today was a swing in price from up to down, then back up and then down again.  I don't think even day traders would have an easy time trading these swings.

SEN: Bearish
ST: DOWN
PA: NA


My experience tells me that the best course of action, is to not take any for now and let this play out until we get some sort of SYNC with the ST and PA.


Wednesday 3 February 2016

3 Feb 2016 - It's Complicated.. It's Not You, It's Me..

The relationship between price and pattern is complicated indeed when involving time.  The patterns appears to still be in a corrective phase, where prices are moving in sideways 3 wave attitude.  The count is not as important but I do believe in covering all your basis for multiple scenarios.  So I have added a labeling below in (Red abc).  I will eliminate it as an option once prices surpasses the Jan. 20 low.  This option is very enticing in that the target price lands on the 61.8% ret. of the last run.

The ST has shifted to the downside as I was anticipating would happen if price did not rally.  The signal for an acceleration down also triggered in the morning session, but did not last as prices retraced and ended up green for the day.  The clue was when the intra-signal pushed above OS.  The complication here is that both the ST and PA was not in SYNC yesterday, and have traded places today keeping it at odds with each other.  I would trigger a short if signals enter back into OS tomorrow or a long trade if the ST shifts back to an Up-trend bias.

SEN: Bearish
ST: DOWN
PA: NA


The weekly bar is still Neg., therefore price is still behaving towards a bearish market.  The key here is if it closes this week substantially in the red.  This would bring about some strong possibility of volatility next week.. A signal I can't ignore that can trigger a slide.

Tuesday 2 February 2016

2 Feb 2016 - Futures Bearish

So should we go the way of the Futures market?  While the futures has turned bearish,  the SPX has not changed its views, but safe to say that tomorrow should be a different story if price do not rally out of the gates.  Price has fallen short of my 50% ret. target at 1963.  This could possibly be pressured by the 60min 200ma that is also down trending.  I must caution that the ST is still UP, therefore is still open to upside potential.  Remember that we are not about picking tops and bottoms, but exiting or entering at an opportune time.  However, the risk of an acceleration has shifted to the downside in contrast to yesterdays signal.  Volatility has surely played a role in the ebb and flow of the PA signal here.

SEN: Bearish
ST: UP
PA: DOWN


Monday 1 February 2016

1 Feb 2016 - Slow Levitation

Prices were nowhere near excited to move down or up, but the bias is still for an uptrend.  The push looks to be nearing the 200ma on the 60min chart, but am not sure if it will surpass that and try for the 50% ret. level at 1963 I discussed last week.  Either way it looks a bit stretched, and price is following the same angle in time as the 1st leg up (Blue-a).  With an a=c target of 1963, there is a good chance prices meets its target.

We are forming a neg. divergence in the intra-charts.  So beware of reversals especially if signals become bearish.  I am liking this move to a similar move during the early part of Sept. 2015..  The question will be what the outcome of a reversal will look like for our signals and indicator. But as the ST states, it's still UP.

SEN: Bearish
ST: UP
PA: UP

While the price stagnated today, the PA has been changed to UP with a risk of acceleration over time signaled.