Saturday, July 31, 2010

7/31 Fibonacci

SP Fib charts weekly.  My charting tool has a hard time selecting highs as starting points so invert 38 & 62 levels.  The DJI has not been following Fib levels well on weekly or daily since it scored a hit at the April high.  SPX has been following Fibonacci better and I'll pay more attention to it in the future.  A 9-point miss is worse if the index never hits it, which is the problem with the SPX April high.  It did catch the July low right on.  1121 is the resistance.  If it breaks that then there is a potential to 1145.
The DJI is the index that I have analyzed in the past and when it stopped working I dropped Fib. 
Thanks, Josh.

SPX Daily Fib

7/31 Weekly Commentary

I actually pulled a small profit shorting the market from the start of the I1 down move through 7/29.  If I do not specify a stop on a trade I will always stop out at .25% beyond the latest DJI hourly high or low.  Sometimes less if other factors warrant it.  I'm currently long 4% SSO and 4% SP futures.
This Weekly will speak to the prospect that the rally will not continue in accord with I1, but will fall precipitously as expected by EWI and Arch Crawford.  The I1 is bullish through 8/13, where it peaks at 4.62.  This is far short of a buy signal (5.5).

The Daily Commentary addressed the high probability that the stock market will achieve another short-term high to complete wave 3 or C.  It will be wave 3 if there is a subsequent high in the rally as anticipated by I1.  It will be wave C if the rally then declines below SP futures 1100 or 1104 in cash.  In order to confirm the rally's failure this would need to occur, followed by a decline below 1075, basis futures.  This would break the 90-minute M/A as well as a daily trendline for SP, DJ, and ND.

I will be getting flat on a rally to a new high as expected to 1106 or better.  At that point there should be a reaction.  I will plan on buying back at 1101.75 (unless the market enters a trading range) and stop at 1099.50.  If the stop is taken out I will stand aside.  The only way I can go short (as much as I want to) will be if SP futures 1075 is taken out.  The market stalled at 60-minute M/A.  In order to re-enter longs if the stop is triggered the SP futures will need to rally to 1121.75, a new high.  This will also break the 60-minute M/A.
A decline beyond 1075 would break the 56-day M/A that caught the low Monday.  The DJ futures would require a decline below 10,160 to break their 220-day.

Friday, July 30, 2010

7/30 Daily Commentary

Today was the first day off of an I1 low.  Bought 2% SSO at 36.12, 36.61, and 36.41.   Bought 2% SP futures at 1088. Sold futures at 1094.75 and bought again at 1093.25, sold at 1103.25, bought again at 1101 and 1098.75.  After the close I sold 2% SSO at 36.92.  Carrying 4% SSO and 4% SP futures over the weekend. 
Stocks ran into the 30-minute SP futures M/A and backed off. 

Then they ran into the 60-minute M/A and backed off.

Nasdaq cash has a clear count as wave 4 complete of 3 up.

The Nasdaq futures count is just as clear.

Sunday evening I'll use a decline in NQ futures below 1859 to indicate overlap of wave i and, ostensibly, the end of the 5-wave up.  Otherwise I'll hold the 4% SP futures position looking for a new high to complete wave 3 (or C). 
Shifting back to the SP futures, the confirmation of this rally will occur in 2 stages. Taking out the 30-minute M/A  +.5% on 30-minute close will also likely complete the 5th of 3. With a completed 3-wave up then the market will correct. The correction cannot decline beneath 1100 or it will blow the potential for 5-wave up. If it holds above 1100 then it needs to break the old high to 1121.50 to signal that the extended run is on it's way.
EWI says that the rally is kaput and 3rd of 3rd of 3rd is dead ahead.  I am personally bearish but trade with the I1, so I have to be long.  Putting in tight stops at strategic places is how I survive.  Right now the NQ futures below 1859 is really close and important.

7/30 3:59

Bought 2% SP futures at 1098.75.

7/30 3:45

Bought 2% SP futures 1101.  Market still in 4th wave of 3.

7/30 3:40

Buying back SP futures at 1101 and at 1098.75.  2% each.

7/30 3:26

Sold SP futures at 1103.25.  This is only completing a 3rd wave of 3.  So, will be buying back on the pullback.

7/30 3:20

Selling SP futures at 1103.25.  Futures show in 5th wave from this mornings' low.

7/30 2:25

DJ futures have 3 complete waves up.  This low is probably the 4th wave bottom, given I1 rising, but so far they have only 3.

Nasdaq Comp cash has finished it's wave 2 and is rallying in wave 3.

7/30 2:01

The 10-minute close was 1090.75, not a sell.

7/30 1:45

The futures ran into the 30-minute M/A and backed off to the 10-minute M/A (so far).

7/30 1:40

Sold SP futures 1094.75, bought back 1093.25, at the 10-minute M/A.  Stop on all positions is the 10-minute M/A -2.75pts on a 10-minute close.  Currently 1090.50.  Bought another 2% SSO 36.41.
The Nasdaq Composite overlapped it's prior 3rd wave high, which is normal behavior.

7/30 1:20

Buying SP futures limit 1093.25.

7/30 1:10

Putting a stop under my SP futures at 1094.25.

7/30 12:10

Futures show a different count than cash.  I show wave 4 complete.

7/30 noon

Here is the 5-wave in the Nasdaq Comp.  Minimal retracement, so uptrend is strong.

7/30 11:20

I will hold current position unles 10,413 is broken.  Nasdaq shows 5 up.  Different count on the futures, but it is not done on the upside.

7/30 10:48

Just complete 3rd wave up, slamming into the 30-minute M/A at 1099.40.  So far that is all we have, until the 30-minute is broken.  If I see DJI 10,440 I will get out of 2% SSO.

7/30 10:45

The 5-minute, 380-unit EMA was not broken by 1.35% on the downside so therefore is not resistance on the upside.
I bought 2% SSO at 36.61 on the 10-minute M/A confirmation.  The final resistance is 30-minute M/A +.5% on a 30-minute close which works out to 1105 to be really sure.

7/30 10:32

The 10-minute close was above 1095.25 so the 1st big break on the upside.  The SP futures 30-minute M/A is at 1099.25 plus 3.5 pts is 1103 30-minute close or better to formally welcome the bull move.

7/30 10:08

Just completed a 5-wave up.  Waiting to buy on the pullback.

7/30 10:00

I will buy more on a new low or when 1095.25 is hit on a 10-minute close on the upside.  The count of the cash indices is a complete ABC.  Futures allow for another low.

7/30 9:50

Taking a 2% position SSO 36.12 and SP futures 1088 now.

7/30 pre-open

Looking to buy on next low, below 1083.50 SP futures.  Keeping it small until 30-minute MA is broken to the upside.

Thursday, July 29, 2010

7/29 Daily Commentary

I1 tomorrow is up but just barely.  I am flat at this moment.  Got out at SP 1095 4% short and 4% QID.  2% SP was covered and 2% SDS sold at the close.  Actually made money from last Thursday on.  Not a lot, but stopping out .25% above previous highs and getting back in on the diagonal triangle recognition helped.  EWI did not publish a diagonal triangle, but the market looks like it wants to go to the measurement target for it at 1085.  I wanted to go short because I am long-term bearish, but the I1 move from 7/13 to today was less than .5 point.  3.64 to 3.18.  Because it troughed at < 3.25 it was technically a formal sell signal but trading rule #4 (for longer-term trades) states:
4 For longer-term traders:

a) stay long until final peak or until it falls below 9.0, whichever is lower.
b) stay short as long as next peak <3.0.
c) ignore I1 moves lasting less than 1 week or with a swing < .5.
So it was a little-gain swing with 2 days solidly against the trade. 
The Daily Technical Composite is at -6, short of a sell signal, so it is neutral.  I got back home late and will revisit the market in the AM.

7/29 11:50

 Covered 4% SP futures at 1095 and 4% QID.  The rest is set to cover/sell at SP futures 1088. This is my last post until this evening. On the road.  Will evaluate going long this evening.

7/29 pre-open

I have orders in to buy limit SP futures at 1095.25.  This will handle my 6% SP futures short.  The SP futures are at an important moving average, the 30-minute, 92-unit SMA.  The envelope for this is .5% 30-minute close.  Currently at 1108, it implies an upper bound of 1113.50 on a 30-minute close.  This is my stop.
I will wait for near the close to sell the short ETFs. If 1095 is broken then 1088 will be the target.  I'll be going long at the close for a half position. While I will not be changing the wave count immediately (it still considers the Minute2 high as 10,594) I consider it highly likely that the I1 uptrend starting after the close today will take it out. I got a sell signal yesterday when the 30-minute MA was taken out by more than .5% on a 30-minute close.  I'll wait for the inverse before committing the other half position to the upside.

Wednesday, July 28, 2010

7/28 Daily Commentary

Futures count is 3rd of 3rd of C is complete. I1 bottoms tomorrow at the close.  The breakdown was confirmed by the 30-minute close < 1105. 

Since I1 bottoms tomorrow it's time to set an initial target. DJI cash 10,410 would be above the top of the A wave. Breaking this would open up decline to 10,270.  I want to stay short until late afternoon.  The SP futures target of 1095, then 1085.  Either of these would allow me to exit my trades showing a profit for the period from Thursday on.

7/28 1:20

Still waiting on the confirmation.  30-minute close SP futures below 1105 will accelerate the downside.  The evidence of the downside is the completion of the Elliott diagonal triangle which measures to 1085 SP futures as well as the triangle that broke today measuring down to 1095.

7/28 11:00

1 measure that I use for the 30-minute closing price was 1105.00, another was 1105.75.  I am waiting on a definitive close <= 1105.  I'll use that to increase short position.
The SP futures have broken out of a triangle.

7/28 9:30

SP futures need a 30-minute close <= 1105 to get things rolling.  Stop is cash DJI 10,620.

7/28 pre-open

In Albuquerq ue today.  SP futures need to break 1105 to get things rolling. This is the 30-minute 80-unit M/A -.5%.   I1 down through tomorrow.

Tuesday, July 27, 2010

7/27 3:00

Now we have a well-defined triangle in SPX. Should be done. I predict downside breakout.

7/27 2:30

I just updated the Trade History with my trade tickets if anybody is interested. 
High on this rally 10,561.  I did not exit positions.  Need another high. Will sell some on this and the rest on 10,603

7/27 1:45

For those who don't have a stop strategy of their own you can use DJI 10560.  I'm currently 10% SDS and 4% SDS.  I use short-term averages of futures for half of my position so I can't publish these stops (too frequently change).
My accounts' balances just got even for the position from Thursday on.

7/27 1:00

6% short SP futures, 2% SDS, 4%QID.  The first 2 days of the I1 down move were rally days 7/23 and 7/26.  The overnight session was up as well, completing a diagonal triangle.  In a down I1, especially one bottoming < 32.50 I must be short. I follow the I1 like a dog.  Getting stopped out on the 23rd was not all that big of a hit.  I got back in starting Sunday evening and more Monday morning.  Last night is when the diagonal triangle became evident. I'm trying to relate the events during this I1 down period in the face of a stock market rally.  Nobody said it was easy, but we are on the gravy train now. 
Here is the I1:
20100720 36.27178

20100721 36.41742

20100722 36.30637

20100723 34.96335

20100726 33.57488

20100727 32.35731

20100728 31.96437

20100729 31.80197

20100730 31.94768

20100802 33.12613

20100803 34.77583

20100804 36.69522

20100805 38.74793

20100806 40.58552

20100809 42.17691

20100810 43.32631

20100811 44.65306

20100812 45.70546

20100813 46.2804

20100816 45.8179

7/27 12:12

Shorted 2% SP futures 1111.50 and bought 2% SDS 31.79.  Shorting deep inside the 4th wave of the 5 wave down.

7/27 noon

We have 5-wave down in the cash markets. 
Putting a limit order in to short 2% SP futures at 1111.50.

7/27 11:50

DJI 10,540 I buy more SDS. 

7/27 11:12

Covered 2% SP futures at 1108.

7/27 11:15

The SPX and Nasdaq have both formed clear 5-waves down.

7/27 10:45

SP futures broke out of diagonal, then reacted back to it.  Shorted 2% more at 1112.50.  Covering 2% at 1108.

7/27 9:30

Until 10:30 ET the diagonal trendline break will occur at 1112.75 - 1.5 or 1111.25 basis SP futures.  Stop is safe right above the throwover high 1118.75.

7/27 9:05

DJ futures 10524 which is only 11 points away from 10535 high Minute 2, June 21.  Diagonal is in throwover at 1117.50.

7/27 8:30

Even though diagnal triangles frequently have a "throwover" beyond the top trendline before turning down I went short 2% SP futures at 1116, which is near upper trendline.  I'll add another 2% on the lower trendline break =1.5 points.
The DJ futures are up 60.  If the cash market opens up 60 then it is only 10 points away from the 10,594 high which is Minute2.

7/27 pre-open

Stock index futures are in a diagonal triangle.  It is too rare to uncork often but here it is:
Diagonals are 5 3-waves which fits this pretty narrowing pattern.  They don't happen often so I did not want to bring up the potential, but there it is right before us.  I am covering my long futures that I used as a hedge, and will short futures on a 2-point break of the lower trendline.  The measuring point for the down move on trendline break is 1085.  Sounds like a lot, but that's what a diagonal does.

Monday, July 26, 2010

7/26 Daily Commentary

The C wave completed 11:27 this morning for the DJI and 11:48 for Nasdaq and SPX.  Near the close they all rallied 3-waves to new highs.  The high in DJI was 10,525.  I had placed stops at 10,520 but when the wave count totalled up to a 3-wave to 10,520 I waited for the high.  The SP futures will guide me.  If they go beyond the high of 1110.75 by 2 points then I sell them and half of the ETFs as well.  However, futures are selling off after the cash close (off 3.5 points from the high), so this move up was probably pushing out all of the shorts in prep for a move down.  Closing beyond the earlier high and above 10,500 scares traders so few are left short.  Here is the DJI going into the close:
I trade against the crowd, which means I almost always enter positions against the trend.  Once in a position I use the trend and if I mistake a top or bottom then I will chase the market to enter.  This means that there are times when it is uncomfortable entering positions.  Setting stops is essential.  My entry at SP futures 1108 was not stopped out because of the stop shifting to the DJI cash as discussed.  So I'm still in futures short with stop of 1112.75.  So, little exposure here.  My EFT shorts were accumulated starting at DJI 10,460 and up to 10,490 (with the QIDs).  Not much exposure here.  If the futures market exceeds my stop after ARCA session ends at 8:00 ET then I'll overweight a long position to hedge the ETFs.

The trendline break will confirm down move.  There is an important moving average right under it at 1101.78.
Minute2 counts complete, that is the essential thing.  3 days remain on I1.  I have been in positions where marginal new highs are made against me and the market reverses great guns.  This is how the good set-ups are made.
I don't frequently report on my Weekly Technical Composite because of the long time between signals, but the status is still on a sell signal (<-6) until it re-crosses 0.

One of the components of this index is the AAII bullish%.  It hit an extreme on it's 7/9 reading (which is 1 week late) which was the lowest since the 3/2009 major bottom.  So we are on the 4th week off of this sentiment extreme. 

This is the only sentiment indicator that actually flashed buy on 7/9, but it could be that we needed to spend 900 DJI points burning of the sentiment extreme at that time.
Here is the I1 data this week. Thursday is the low day but is close to Wednesday. 
20100723 34.96335

20100726 33.57488
20100727 32.35731
20100728 31.96437
20100729 31.80197
20100730 31.94768
20100802 33.12613

7/26 3:50

I count a complete abc up to the high of 10,525.  Any new high > 10,528 and out I go 4% QID and 4% futures.

7/26 2:30

I want to re-post the sequence of posting from the time Friday when 10,400 was breached and I switched to an alternate count until last night when I posted the final targets for the C wave.  I was out of all futures and most of my short ETFs at DJI 10,376, the orthodox high 10,351 + 25 points.  It took a few minutes to get the post out at 1:40 with DJI at 10,403.

7/23 1:40   with DJI at 10,403.  It stayed below 10,403 until 1:53 allowing time to reduce positions.

About another 50 points on the upside.

7/23 1:45

Current wave count calls for another high about 10,460 cash DJI. The market went nowhere today because it was in wave 4 forming a rectangle for the final push.

7/23 1:53          This is the post with the alternate wave count.  Projection at this time was 10,460.

This is a DJ futures chart add 50 points to equate with the cash DJI:

7/23 2:00       Max updated to 10,480 DJI based on 220-day M/A. 

The 220-day M/A agrees with my earlier DJI projection. The 220-day is 10,330 but has an envelope of 150 points, say max at 10,480 vs. 10,460 based on the rectangle. This will be the final push even though it required going to an alternate count.

7/23 3:51

Looks like 1 more new high.
7/23 4:06

SP and ND futures are making new highs here.
The Weekly Commentary outlined the SP futures resistance and the Sunday posts laid out the strategy for capitalizing on an SP futures push to 1108-1109.  My stops are constantly moving based on moving averages, except when a high or low has been established which is at the end of a wave count of more than sub-minuette degree.  Then I post the line in the sand.  Knowing Friday when then DJI broke out that the max was first 10,460 then 10,480 at 2pm allowed me to exit most of my position and await better prices. 
To help those holding positions that want to use my stop method, add .24% to an orthodox DJI high to obtain a stop price.  Opposite for lows.   So the stop for a current position is DJI 10,495 + 25 or 10,520.

7/26 1:10

Instead of peaking in the overnight session the S&P peaked during the day session, right at expected stiff resistance. I was monitoring the night session because frequently price extremes register there.  The wave counts for DJI, SPX, and Nasdaq are all complete.   I went short 2% overnight with an extremely tight stop and short again at 1108.  I bought 4% QID at 16.85.  As long as the cash DJI does not exceed 10,515 I'm good.  The 5th wave occurred right on target, although the market drills teeth without Novacaine.  That's it's job. 

7/26 12:15

SP high 1109.75 and at trendline resistance.  If you ever wanted to short near a top this is it.

7/26 noon

SP futures came right up to resistance as posted last night.  High 1109.50.  DJI orthodox high 10,495 and it double-topped to 10,499. 

7/26 11:45

Here are the SP futures charts showing resistance at 1108-1109:

The SPX cash completed an extension just like the Nasdaq.  The high for SP futures is 1109.50.

7/26 11:35

The DJI and SPX new highs are 3-wave.  The top is the old highs.
The Nasdaq just completed it's upward wave count for Minute2.  Bought 2% QID on it's top.

7/26 10:25

Now that the cash market has caught up with the futures completed wave count I can start showing cash charts again.
The cash market now has the same completed wave count as futures.

7/26 10:20

SP futures high 1107.50, shy of the 1108-1109 target.  DJI high 10494 slightly exceeded the 220-day envelope of 10,480.  Top is in!

7/26 10:05

SP futures daily resistance at 1108.25.  I have a stop at 1112. The cash mirrored the earlier futures activity by completing it's 5th wave.  DJI cash should stop at 10,480.

7/26 pre-open

Shorted 2% SP futures at 1103, stop 1105.  DJ Futures currently near top of a trend channel.
Here are the SP futures:

Sunday, July 25, 2010

7/25 Sunday 8:50pm

The stock index futures hit a high right after open and since have done their normal nightly routine, sideways.  The last wave v could be the end of the move or it could extend to 1109.  Low-volume trading is not something you want to do routinely.  Anyway, I still am short a small amount with a stop at 1103.  Breaking that will mean an extension.

7/25 Sunday 7:30

The stock futures extended their rally, but only marginally.  It still completed the wave count.  I am short 2% now with stop just above the high 1102.75.  With no volume I expect a nothing market for the next 6 hours.

7/25 Sunday 11:30am

I normally don't post for the Sunday futures session, but this one may be significant.
Friday afternoon left 1 more high to be made before the wave count is complete.  Projections indicate that it will terminate at the SP futures 1108-1109 level.  This will be the end of Minute2.
I1 is on a sell signal, with a low 7/29 of 3.18 which is below the 3.25 sell signal threshold.  Because of this as well as daily and weekly resistance clustered around the SP futures 1109.00 level I will become aggressive tonight on a rally. 
The DJI cash 220-day M/A crossed Friday at 10,330 with a 150-point envelope giving a maxima for tonight's completion rally of 10,430 DJ futures. The DJI cash 150-day M/A lies above the market at 10,473, which corresponds to 10,423 in the futures.
The following is the SP futures weekly chart with clustering at the 1109.00 level.
There is also a 73-day M/A which crosses at 1109.

Saturday, July 24, 2010

7/24 Weekly Supplemental

Here is a study of the I1 signals dating back to 3/1970 when the I1 had all of the data and price series that it required.  Although I1 does not include price, volume, or other market-related data in it's construction it had to go through a series of correlation phases in order to assign values to the input series that related to future price expectations.  Thus, 1970 is the earliest that I1 can honestly exist.
The reason for this report is the 5-year sub-par I1 values that began in May of this year.  Therefore I have an expectation that downward movements in I1 will result in more dramatic price drops than in the past.  The government-sponsored monetary inflation has biased both the economic direction and the stock market.  This environment has changed.  The government in the future will not have the power to use monetary inflation to present to the voters any evidence that government can manage the economy.  The debt load simply will not support the multiplier effect through economic output.  Thus, going forward the inflation trend will be removed from stock prices.  Going back I wanted to obtain a conservative measure of the I1 down movement results per detrended price data.  To clarify, if an I1 down move resulted in a price movement that was >0 but less per day than the long-term trend then I wanted to score that as a hit rather than a miss.  This will provide me with a conservative probability of future signals' results.  This will be very conservative because of the sub-par I1 values over the next 5 years creating a sharply lower price trend.

I'll present the report first then include interpretive commentary.

I1 UPS: 673
I1 UP HITS: 389
I1 DOWNS: 673

Since 3/1970 the trend has resulted in an upward bias to the DJI of .0012, or .12%.  This value is used to detrend the following fields:
The computation of the number of I1 movements was simple.  An I1 move occurred from the time that a I1 daily value changed direction until it changed direction again. Thus, the number I1 UP is equal to the number of I1 DOWNS at 673.  Hits are recorded as the number of price movements that agree with the I1 direction over that period.  Misses are the converse.  As noted above downward hits, misses, and change per day were detrended because I expect the trend to no longer be in effect until 2015.
Notice the ration of I1 down hits to misses  545/128 or over 4:1.  This is very encouraging because of the extraordinary bull market that existed from 1970 onward.  This encourages me to be aggressive going forward on any I1 downward movements, but especially on I1 formal sell signals. I will be less aggressive on I1 upward movements unless they are buy signals or the technical composite is >= +24 on the turn date.
Finally, notice the detrended price change per day the the market traded with a down I1 movement.  At -.21% it is extraordinary. 
Here is a list of I1 movements going forward with date range and I1 change (times 10) over the move:
20100722 DOWN 20100729 -4.50
20100730 UP         20100813 14.34
20100816 DOWN 20100902 -20.75
20100903 UP         20100910 6.98
20100913 DOWN 20100930 -13.46

Friday, July 23, 2010

7/23 Weekly Commentary

I am currently 10% SDS and flat futures.  Will go 8% short futures Sunday evening.
The stock market went nowhere last night and most of today, building what turned out to be a wave 4 rectangle.  The breakout caused me to revert back to an alternate wave count. 
Notice the 220-day M/A crossing 10,330.  This M/A is one I use often and has a "gravity well" of 150 points.  This means it's resistance envelope extends to 10,480. 

The futures markets were making new highs to complete s5, waveC, and Minute2 after the cash market closed, but the futures markets close on Friday at 4:15 ET and the move had a bit more to finish up.  I am flat futures having been stopped out on the early stages of the rally, but will enter short futures Sunday.  SP futures closed at 1101 and have both daily and weekly resistance clustered at 1109.  I don't think it will extend that high, but that is my worst-case. 
Here are some gratuitous charts showing the SP and ND futures already at new highs but the DJ not quite there yet:

I did buy a bit more SDS after the close.  My thinking is that the new highs will not extend far and that the futures markets will turn early in Sunday's session.  Hopefully, Monday will set up as a nice down open. 
Here are the I1 values:
20100720 36.27178

20100721 36.41742

20100722 36.30637

20100723 34.96335

20100726 33.57488

20100727 32.35731

20100728 31.96437

20100729 31.80197

20100730 31.94768

20100802 33.12613
The daily technical composite declined to +3, thus rescinding the buy signal it has been on since peaking at +31 July 2.  This clears the way for the decline to commence.

One of the reasons that I expect the stock market to start behaving worse than the I1 from here on is that I compute a 4-year cycle in such a way that 11/1/2010 is the projected bottom and the cycle accelerates as it progresses.  We are now entering the stage where the acceleration will override other market forces.