8/13 Weekly Commentary

I1 peaked today and is on a sell signal with the immediate low at 2.5 the beginning of September, but the sell signal will continue with brief interruptions until mid-November.  Due to the fact that this 3rd wave originated from a diagonal triangle I'll carry a large position (for me) as a core position. 

The Longer-Term index indicates a low right after mid-October by returning to -4.  This does correspond to an I1 low in that time frame.  However another I1 bottom occurs in November at sub-zero level.  The 4-year cycle bottoms around the beginning of Movember, so I'll evaluate the technical condition at that time to determine which I1 low I'll liquidate core shorts into.

The Daily Technical Composite remains at -7 or a very minor sell level.

Wave 4 of the first 5-wave down from Monday's high completed early afternoon.  I have been labelling these wave Sub-Minuette in order to allow for a lot of subdivisions in what I expect to be a powerful 3rd wave downward.  EWI has the same count but labels them Minuette so I'll adopt that degree. They allow that it might be Sub-Minuette but this will depend on the complexity of the wave development going forward.  The interpretation is exactly the same for now.  If I am correct this long slide will have dizzying labelling nuances. It takes good countertrend moves to have confidence in wave labels.  We might not have many of those. This is one reason that I will be trading less.  That having been said the rectangle that is Minuette4 indicates a sharp decline into a bottom that should yield a large upward correction.  I will not be buying this upward correction but will trim back exposure due to the extended wave we are in.  

Now for the not-so-good news.  Rectangle 4th waves don't lead to extended moves.  They are quick and frequently don't fulfill measurement expectations.  DJI and SPX are at daily and weekly support levels so I can only see 100 points for the 5th wave out of this rectangle, say DJI 10,200.  The good news is that I'll be able to use shorter moving averages so that I don't need a bottom number.

Currently we are in Minuette5 of Minute1 of Minor3 of Intermediate1 of Primary3. 

Currently 8% QID and 8% DXD.  DXD average 27.14, QID 17.87.  Bought some early afternoon, some 3:40.  I was going to wait for the close to belly up but the indices went into a triangles and I just barely got the orders in.
Short 2% DJ futures at 10310.
It looks like a completed 5-wave down at the closing lows.  Futures will probably pop up a bit Sunday.  All cash indices except DJI closed on their lows, so that pop may not materialize.  If futures do break below their lows then it's bombs away in an extension downward.  Nasdaq was weakest of the big 3.  Even though cash closed below the earlier low the futures did not.