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.