SPX, DJI, and Nasdaq are all clearly ending Minor 5 of C of Primary 2 which, when complete, will terminate the rally from March, 2009. In addition, all have completed the final Sub-Micro 4 of the series.
I sold the SSO at the close Friday, early by 1 hourly wave.
The Daily Technical Composite is -16 which is 6 points shy of a sell signal. I will update the Weekly Technical Composite when I return home to my larger machines. I1 continues it's rise into 2/22 and I must respect that it predicts a continued rush into risk assets. The dollar index broke a key 90-minute M/A Friday and I'll go long Sunday evening. Breaking this M/A means that I can carry the position naked, that is not balanced against long stocks. The dollar is signalling a shift out of risk and into safety, as are bonds. If bonds continue their rally then that confirms the dollar and the big money is selling stocks. This does not mean that stocks decline immediately because distribution can occur with the bit still in the teeth of the leveraged funds and the public.
My strategy is clear. The market closed only 75 DJI points above critical points and with the envelope means a support break at 12,035, or less than 2% away. This figure will move up as long as DJI stays above the critical support M/A. This will allow me to enter short if the need arises but still allow the market to extend as I1 predicts.
I want to be clear that I am not arrogant enough to believe that I'll continue to be right and EWI will continue to be wrong. They are very bright people. However, no longer will I go naked into the night and put on positions against the trend unless I know with a high degree of certainty that the moment is right. That's why I ended my software development career and focused on finishing development of I1. I have plunked down capital on OPO (other people's opinions) too many times in the past.
EWI gets caught by too many biases and oft ignores the repeatedly stated idea that EW describes form but not time frame.
ReplyDeleteOf note: there is an open gap on the DX from a few days ago. while this gap is due solely to the ICE trading schedule, I have seen such gaps filled time and time again. This time is likely not different.
ReplyDeleteGlad to see that Margie came through the surgery fine, but sorry that she is experiencing continuing pain.
ReplyDeleteI sure do appreciate the work that EWI produces. I have noticed that EWI struggles with the same problems that most other EW followers have, that corrections take longer and become more complex that originally estimated. I got the first clue that market corrections were going to be a challenge for me to understand when reading the book Elliot Wave Principle; so many pages were devoted to the varying corrective waves vs motive waves.
DennisP
Dennis, the DX starts the evening session 2 hours later than the currencies, so gaps on the 4pm bar are common.
ReplyDelete