7/6 Daily Commentary

The stock market bottomed last night at SP Sep futures 1004.  A global stock rally then began starting in Asia and carried through without interruption to SP futures 1038.  This 3% rally was, according to I1, the start of a 2-week uptrend.  In the cash market the DJI advanced to the 5-minute, 380-unit M/A.  The market then took back 2/3 of the advance all the way back to the 30-minute M/A.  I bought SSO in three stages at an average 32.17, so I am currently break-even.  I broke even on futures, buying at 1022 and 1026.25 and getting stopped out for half at 1020.50.  Currently futures are at 1025 and I am long 2%.  My stop on all positions is the 30-minute M/A -.5% on a 30-minute close.
Here is the 30-minute futures chart and wave count:

Here is the DJI cash chart.  The wave count is the same as the futures:

I was fortunate to break even with that kind of wildness. 

Looking at the above charts without the I1 one would state that an ABC occurred and the stock market is declining again to new lows.  However the count according to the I1 is that the first of 5 (or more) waves finished today.  2nd waves like this afternoon are by nature dominated by players of the old trend.  The 1st wave in a bottom is considered by the prior trend-followers (the bears) as a sucker rally and is shorted heavily.  The 3rd wave takes the trend followers to the woodshed.  I1 is saying we should get ready for the 3rd wave up.

Although 2nd waves can continue all the way to the bottom tick,  I am using the 30-minute M/A -.5% on a 30-minute close as a stop.  We won't know we are out of the woods until the DJI advances past the 5-minute, 380-unit M/A +1.25%. 

By the way, today was another example where the wave probabilities as dictated by the I1 resulted in my wave count differing from EWI and being proven correct.  The fact that we did not make money today is not relevant to the fact that Minute 1 of Minor 3 bottomed last night and a multi-day rally is thus in the cards.