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
Well this run up is never ending. It doesn't even take a breath.
ReplyDeleteThe waves seem clear but just keep extending.
For the I1 to be effective here would require another 'flash crash' for two days and then correct upwards for a few days. Does that seem likely to you? We seem to be over extending and thus could drop like a stone.
If DJI has not broken 10,000 by the close 7/29 then I'll go long for the I1 rally. If we do not have a crack here over the next 3 sessions then I'll be prepared for another revision of the count, extending Minute2 beyond 10,594. But I'll wait and let the market tell me to do that.
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