Cycle degree: 2000-2003 wave a, 2003-2007 wave b, wave c ongoing.
Primary degree: 2007-2009 wave 1, 3/2009-4/2010 wave 2, wave 3 ongoing.
Intermediate degree 4/2010 - ?? wave 1 and 2 complete, wave 3 ongoing (see chart)
Decline to 6/8: 5% from here
The July - August 13th rally would be the first opportunity to go long, but even then it is not a buy signal. The August 13th peak is important.
Based on I1 values alone the market will undergo it's most destructive decline mid-September through December 21st.
We are in minor wave 3. I hope that minute wave iv is complete and doesn't require more bounce Monday:
I am holding 5% SDS on a longer-term I1 short stock signal starting 4/29 and ending 6/8. This is justified by the longer-term I1 signals rule set. I have come up with what I believe is a stop-loss that I can live with for a longer-term position, the DJI 12-day M/A +1.3%. This is a much wider stop than I have been using in my trading and thus I sharply limit the exposure to the longer-term trade.
So, according to the rule set using the smoothed I1 the short is good until the raw I1 7/1 bottom because the smoothed I1 does not experience an uptick until July. However, the raw I1 also has a rule set for extended trades which targets the 6/8 low because the uptick from the 6/8 low has a magnitude greater than .5. So 6/8 is the date that I will use to liquidate my longer-term trade. The raw I1 short-term trade starts 5/24 and lasts through 6/8. This is when I will place most of my short.
Here is the raw I1:
I was reticent to enter the short trade because the raw I1 was uptrending slightly through today. However, when the DJI broke through the outer limit of the 5-minute, 380-unit M/A (critical support) I was compelled to short according to the longer-term trade rules.
Bonds have rallied well. I came into the day 10% long bonds but reduced to 5% in ARCA pre-market at a nice profit. After the weekend I will look to increase exposure to the long bond TLT.
Finally, silver has broken down out of a top formation. It has also registered a sell signal against it's hourly M/A:
Hi Steve
ReplyDeleteAre you eyeing the 6/8 bottom date through 6/21 as a point where you would put in some short term buys on signs of an upward movement in the market or for the most part waiting until the next long term short sell signal? I will be moving completely out of my long term short position at that time and would like to try my hand at a few smaller short term plays, up or down based on your guidance.
How far down do you think we are going by the 6/8 date on the SPX?
Looking at the I1 chart dates for buy and sell points, do you ever stay in your long positions based on looking at other technical’s until they finish playing out? What I mean to say is there any reason you would hold your long term short position after 6/8 a little longer or a little less as you approach that date?
Steve
ReplyDeleteI was trying to wave count this morning and I wanted your opinion on if I have this right. We have started a 3 wave down of the first 5 wave down from the top of the market dated 4/26/2010. Looking closer in that 3 wave at a 10 day 15min chart we are at the start of a 3rd wave or end of a second wave of a smaller 5 wave down. Might get a little more bounce on Monday but good chance we will head down some time after the open, if not then, over night into the futures and down on Tuesday. Of course this assumes that the market topped on 4/26. Can you tell me what you think in that I am just starting to learn wave counting.
Jack,
ReplyDeleteI will follow the I1 into the bottom and no longer. I will not attempt to play the long bounce off of 6/8 because it is occurring at a low level (<4).
As to the extent of the decline let me include that in the weekly commentary.