8/4 Daily Commentary

Not a bad day.  Made some money in futures overnight, then took 30 ticks out of SSO and 35 ticks out of QLD.  Trading range trading.  Where are we going?  The prospect of Minuette3 completing means the possibility of downside as indicated by futures.  The cash indices look like might be 1 more pop to the upside before Minuette3 ends.  However, the time for this is running out.  I was expecting the pop to occur today.  I'll buy on DJ futures exceeding 10,668.  I'll be buying at 10,555.  There is a trendline and a moving average coming up on last night's lows.

Bottom line:  Although I1 is rising the market needs to show me that it is not heading down for a 300-point correction to retrace a 5-wave starting July 20th and extending 700 points.  It is possible that Minuette3's 5th wave will extend upward and my order at stop 10669 will cover that. 

I just posted a response to a comment by pimaCanyon that is a review of the basic strategy. 

Depending on the severity of the I1 turn (the spread high to low / low to high) and especially if a formal buy/sell signal is issued to the level of the target (<3.25 and >5.50) I will trade late the afternoon of the turn date. I will have a moving-average based stop in case the turn comes earlier in the day. Once I have the position I most frequently use a .25% stop beyond the DJI high/low.  This is for a 2% position.  I then wait for the 5-minute, 380-unit M/A to be broken by more than 1.35% then increase the position size.  I try to wait for a pullback rather than jumping in at the M/A break.

As far as this particular I1 turn date I still believe that the top will come early.  I have a shorting strategy in mind in case this happens.  Worse case is that I have to wait for cash DJI 10,400 to be pierced before going short.