7 Aug 2014

Seems the acceleration to the downside has been true to its words.  The EW pattern seems to be expanding itself.  I have been asked why I do not trade the counter trends to maximize profits if my ST tells me to go long.  Today's action proves just that in a smaller scale. Since our MT is down we should look at the possibilities of risks.  The risk I provide are valid as I have seen them time and again.

- Price Gap trends occur in the direction of the "Trend".  Next trading day gaps occur all the time and this can make or break a trade.  Best be on the side of the "TREND".

- ST is just that (Short-Term).  It can be traded, but only in an intra-day level and should be exited by end of day.

-Rallies and retracements are short, and the only time we have a longer than normal retracements are on CIT.

-Price acceleration are killers, and they can outrun even the best of traders.  Unless you have the best discipline in the market, your emotions and mental state will most likely fail you and you will end up riding your position all the way down.  All we hope is that if that is the case, that you are short the market and riding it down.

I am saying this now while markets move slightly lower because if the rally occurs and investors mentality is not on the defensive, then trouble occurs when the next move happens.  Our MARKET signal is at a BULLISH sentiment at the moment, but is close to turning BEARISH.  This will only be known once I see a reset on indicators while longer term indicators stay bearish.  This confirmation is critical in any long-term CIT. This lesson should be ingrained into your psyche now rather than later when all is too late.  I am not calling the end of the world here, but markets are not looking as good as it was... say a month or two ago.  This could be the the longer CIT that the bears are looking for that has eluded them for years.  We also have to remember or that I should let some novice know here, that if we look at all the flash crashes and the great recessive periods, one can actually see the turning points before hell took over the markets in a daily or weekly charts.  So again, I would not trade against the trend unless you are a few who like pain.. lol.

If I am right and the last few months our MT (although lagging) has been showing a clear negative divergence, then it is not out of the question that on a longer term basis or main trend basis that a turn can likely occur, and this with the usual weekly to monthly running trend.

MT: DOWN
ST: DOWN
PA: DOWN