5/7 Weekly Commentary

A very good week, although I wish I had been in for the 15-minute crash.  Ah-well. High-Frequency Trading made it's debut in the politicians' hall of shame.   I don't trade individual stocks for several reasons, one of which is algo trading gaming company shares.  This is the first instance that they gamed the entire market and is the only reason that I can find for the 700-point plunge starting at 2:35 Thursday.  The computers stopped bidding entirely after they had probed limit buy orders and found individual traders had no buy orders in beyond 3% down.  Then they just probed and sold, probed and sold, probed and sold with no buyers and hit stop-loss orders,  then bought, bought, bought when they probed huge buy orders in at the 220-day M/A.  . 
I have a short-term count that indicates higher stocks over the weekend.  This does not alter the forecast.  I am reducing exposure to 5% SDS over the weekend, though.  Got 33.80.
I1 bottoms Monday at the close or into Tuesday (the two days' values are close), then enters a minor uptick.  I see weakness through the 19th, so even if stocks open higher Monday they will wind up down next week. 
SPX, DJI, and XMI count 5-down from the 2/26 high (wave 1).
Wave (2) so far has taken 4 hours to today's high at 12:15.  Wave 1 took 9 days.  4 hours is not enough time to correct a 9-day decline.  Therefore I am inclined to view the action as a triangle.  As indicated on the chart today's low near the close was labelled d.  An e wave up well below the a wave high will culminate the consolidation and provide enough time to absorb the buy-the-dip conditioned demand.  This will make it a 1.5 day wave 2.

Any wave counts are my own. Elliott wave theory is an integral part of my trading. For information/training/books on Elliott wave see Elliott Wave International.

I'm re-posting the weekly technical composite chart which has a sell signal as of last Friday:

Silver is advancing to a high next week. It's forward gauge should time the top:

Stock Market Longer-Term Trades

I created a slowed I1 to highlight longer-term trends.  The model positions should include a longer-term allocation, so I am launching a weekly Longer-Term Trades section which includes start and end dates for trends in I1.  This section will also include the slowed I1 and commentary on raw I1 in the light of longer-term trades and the slowed I1 trend.  So, to begin here is the slowed I1 chart.  If you wish to review how to interpret the slowed I1 read the Longer-Term I1 Signals.  If you wish to review how to interpret the raw I1 in the light of longer-term trades then read Intro and Concepts for the I1 trading rules.

 

Next, the raw I1 chart, then a commentary on the trends and longer target dates.

The raw I1 bottoms Monday 5/10 but the subsequent uptick is <.5 so longer-term trades may be held until the next bottom 6.8.  The value at that time is < 3.25 so the entire move from 4/29 through 6/8 is a formal sell signal.  Longer-term trades should be liquidated at the 6/8 bottom.  This is reflected in the slowed I1 which shows hardly an uptick until that time.  Longer-term traders should stand aside until 6/21 because the upward move is greater than .5 in magnitude but peaks under 5.5, so no buy signal.  From the close 6/21 all traders should be short until the first week of July.  The day before the 4th is seasonally strong so the short should be liquidated 7/1.

                                                                           

                                           Short-term Trades                               Longer-term Trades

Formal Short signal            4/29                  5/10                             4/29                   6/8