Friday, March 11, 2011

3/11 Daily Commentary

I came in long YM futures and with 6% SSO.  I was stopped out of the YM for a tiny loss when the quake occurred.  Not knowing the extent to which the tsunami might impact Hawaii or west coast I sold 2% SSO for a tiny 20-tick hit.  I was successful buying NQ futures and sold them when the SP futures 30-minute M/A was hit.  I waited for the market to rally to DJI critical M/A and sold 2% SSO.  Now the market is above the 30-minute M/A but still below the critical M/A.  The only time that I can expand a position beyond 6% is when I am on the right side of the DJI critical M/A which closed at 12,083.  Any time DJI trades 1.35% beyond this M/A puts me on the right side of the trend.  Currently this is 12,265.

The positives are:
I1 rises smartly into 3/25 and remains at a high level generally until mid-May.
The 50-day M/A held for SPX and DJI
We are on the right side of the 30-minute M/A

The negatives are:
We are on the wrong side of the DJI critical M/A
Charts look toppy which encourages selling on rallies

Technicals are neutral
Elliott wave count is either Minute 4 in progress or the entire shebang from 3/2009 is done. I1 favors the Minute 4 triangle count, which is complete.

Obviously I would like to see the DJI critical M/A punch through it's envelope, but I'm going to remain at a maximum 4% SSO until I see it.  Monday I'll look for an SSO long entry around 51.40.  I sense that many traders were short on Friday's cash indexes trading below the lows of 2/24.  That was not mirrored in the futures with those lows holding.  The quake seemed to validate the short trade and I suspect many were caught in a bear trap.  Going into the weekend with only 2% SSO and 2% TLT.

I1 is up until 3/25 but remains at a high level until mid-May. So until 3/25 I can trade only the buy side. After that I'll trade both sides of I1 until mid-May when I'll go short for the distance. Being repulsed by the financial chicanery employed by the Fed and Treasury, I find it distasteful being long the stock market. However, I cannot ignore this clear I1 bullish environment through 3/25.

The dollar ran into it's 90-minute M/A and, in spite of the overnight stock decline, could not overcome it.  It requires .55% 90-minute close above it to escape.  The EC 90-minute mirrors it.

As a reflection of the financial terpitude the precious metals are not due to seriously decline until after mid-May.  This may not mark the absolute top because of a plateau period in the PM1 sentiment gauge starting next Wednesday.  However, I don't need the absolute top as long as I am short at a secondary peak with a decline directly ahead.

I'll be shorting the Euro Sunday evening.  I see one more minor high to complete a 3 up.


  1. good luck steve but I am short now all the way..

  2. Peter, EWI is short as well. I just have to stay with I1. I know the wave counts, but I believe that nature finds a way.

  3. Steve

    I’m going with you on this one, looks like a bear trap. Looks like wave 4 is complete and we are moving to new highs. If we can stay above 1294 on Monday I will start to enter some small longs and increase as we move past 1326.4 and finally past 1344.4. Friday closed with 5 up (I got stopped out on the 5th wave move) so a small 2nd wave down to 1294 or above and then a strong large 3rd wave move up should be what plays out. I made a nice profit on that correction lasting 15 days. 3 more months of POMO and now talk of P3, Didn’t we talk about P2 and P3 way before any one was talking about it back in March and April of 2010 Steve. The USA wants to save the world, trash the dollar and inflate the stock market. Japan will start (J) P5 over their.

    Jack C