Saturday, December 17, 2005

NDX - E-wave count

NDX sports a clear e-wave count, following all elliot rules, chanelling and alternation. If the lower trendline of the triangle gets taken out, then this count is wrong.

Friday, December 16, 2005

SPX - Weekly, Daily, Hourly

My anlaysis is based on Trend and Momentum. Best signals come when both are in Sync. Blind trend following is dangerous. Look what happened to Gold last week. The upward trend was intact, but the momentum clearly gave a sell signal. Those who ignored the momentum got clobbered.

There's been a lot of top picking and top calling in the stock market. Let's examine what the markets are saying.

SPX Weekly - Momentum buy, Trend Buy

The weekly picture is very clear. We have a weekly breakout and the market is consolidating above the breakout line. Look at the CCI, which is yet to show divergences with the price. This most likely means the top is at least another 1-2 weeks away. The weekly Full Stoch is also rising and no crossover there.

SPX Daily - Momentum Buy, Trend Buy

The daily trend is up as evidenced by the EMAs and the trendline itself. The daily chart is a bit of concern in the ST term. The price is perched on the trendline, break of which could lead to the retest of recent lows. So far we have had 4 failed breakout attempts. Again we need momentum divergences here, which has not yet been established.

SPX Hourly - Momentum Sell, Trend Buy

Hourly chart is suggesting some sort of expanding formation here. Look at how the CCI is going from extreme to extreme, which is typical of an expanding environment. In a contracting environment, the CCI keeps oscillating around the zero line. Hourly is on a momentum sell, but is still a buy on a trend basis. If we take out the trendline from 12/8, we could see some serious selling, causing the EMAs to slant downwards and create crossovers, issuing a trend sell. Until the Trend and momentum are both on sell, it's a weak sell and one tends to accumulate a lot of false signals in the long term by taking those weak signals.

So for VST, i will go long on Monday, if we get a hourly momentum buy. If the hourly trend turns down, i will go short.

Thursday, December 15, 2005

12/15 - Intraday observation

10:00 AM PST

The intraday pattern on DOW seems eerily similar to 10/3. High at the open and a nasty selloff and a sideways flag. We'll see if we get a big 2:00 PM EST selloff. Intraday pattern looks very similar, but the daily configuration is very different though. Just an observation.

I am looking to go short here, if i get a sell signal on the 30-min.

1:30 PM PST

Except for the initial spike and the thrust down (one buy and another sell program neutralizing each other), nothing else transpired today. I don't expect much to happen tommorow either, being a OPEX day, other than some crazy intra-day spikes. The hourly and daily trend remains intact so far and the bias continues to be to the upside.

Wednesday, December 14, 2005

SPX - Patience bears

The market played almost exactly to my script yesterday. We moved up (did not gap up), came back retested 1276 on ES and shot higher. The daily and the hourly trend continues to be up. So the winning trades will be on the long side, until that trend reverses.

I admit this rally is long in the tooth and can reverse nastily anytime. So swing trading on the longside is a risky proposition. One can make 20 points on SPX and give it all back in a day. Or worse enter at the top and lose big money. Best strategy is to wait for good 15-min or 30-min setups and daytrade the market with tight stops in the direction of the hourly trend. For instance today on YM, at 10920 there was a good 15-min momentum buy setup, the 15-min EMAs were pointed up and it required a 13 point stop. Took it and traded for a 50 point profit (almost 1:4 risk/reward).

There were inter-market divergences today between NDX and SPX/DOW - warning signs that a top is getting close. As for the targets, i still beleive SPX 1285-1290 is in the cards.

I cannot provide the signals from my system for entries and exits, as that would constitute buy/sell advice. But i will try to post the Daily and hourly trend/momentum and trend turns as i get signals from my system. My goal for this blog is to continually remind myself of the underlying trend and at the same time share it with others. Comments are always appreciated and if you have any ideas or analysis you would like to share with me, e-mail me at

Tuesday, December 13, 2005

SPX - Next leg up underway...

As i said yesterday, it was a tinderbox situation. The powder just had to be lit. When the hourly EMAs are as flat as my abs, the risk/reward becomes even on both the sides. That's why i hate those situations. I would rather take a trade when the EMAs are moving up or down.Having said that, i will be looking for daytrades in the direction of the hourly trend which is up for now, when i get a good setup.

This move looks like a headfake, but that's what the final leg up is supposed to look like. I think the market will rally with poor breadth and volume with the shorts fighting all the way up. I will better be a bit late and let the downtrend establish itself again before jumping on the short side. Me thinks SPX 1285-1290 is in the cards. If the hourly turns down here anytime, i will be quick as lightining to change my bias and join the shorts. Until then, long is my song...

Look at how nicely they created the zero line reversal on the CCI(14).

My preferred scenario for tommorow is probably a gap up and then come down retest the 1274-1275 on ES (1264-1265 on SPX) and then take off to the upside. If SPX 1261 is broken kiss a goodbye to the uptrend.

Monday, December 12, 2005

SPX - Tinderbox situation

Tommorow is the FOMC day again, which means what Greenie says or not says will cause a big move. The Daily and the Hourly continues to be on a sell on the SPX, more so on the DOW. The daily CCI(14) is still hovering below zero, but barely so.

It's a tinderbox situation. The hourly EMAs are flat on the SPX, which means it doesn't take much to create a hourly buy or sell here. Since the daily CCI is barely below zero, it doesn't take much to create a zero line reversal and a daily buy here. So keep your powder dry and follow the big money, after they push the buttons post Fed announcement. I am completely flat here.

Sunday, December 11, 2005

SPX 12/11/05 - Possible bearish diamond formation

As mentioned on Dec 07, we got our gap filled on ES at 1252.50. Now do we race up to new highs from here ? Purely from a e-wave perspective we never got a wave C (clean 5 waves). So the downside appears incomplete at this point.

SPX appears to be squeezed in a possible bearish diamond formation. SPX 1250 is the key now. Is 1250 gets taken out, the next minor support is in the 1241 area and major support around the 1230 area. My expectation is for a test of the key 1230 area, get everyone sufficiently beared up and then take off to the upside for the year-end rally.

From a momentum perspective, the CCI(14) has broken below the zero line. The Full Stoch has rolled over, suggesting there's more work on the downside. But given the size of the decline relative to the thrust out of these oscillators suggests that this is not the beginning of the next major leg down, instead a correction in the uptrend.

For now the daily and the hourly trend are down. Go with it. Shorting the bounces on the intraday charts would be the theme for the next few days, until the hourly turns up.