Daily and weekly back in sync

My daily buy signal on May 31 turned out to be a massive whipsaw. With the break of SPX 1311, it's back on a sell. Well, the weekly sell from 5/20 survived by a point. The million dollar question is now whether we can break the 1249 lows or not ? If we do, my system will generate a long term sell signal similar to the one that i posted on this blog when we broke 1370 back in Jan 08. Until 1249 holds, we will have to treat this as a correction in a bull market.

I will update again when the daily flips to a buy.

Good luck trading !

Daily buy signal on SPX

My system has fired a buy signal on SPX daily charts as of close today. So we are now back to uptrending mode, based on my definition, and hence buy-the-dips mode. The last sell signal on daily from my system was on May 5. A close below SPX 1325 is now required to invalidate this buy signal. I will updtae again whenever this signal changes.

Weekly is still on a sell. It will be invalidated if SPX trades above 1347. If the weekly also flips to a buy, then it's high odds that SPX will challenge the April highs or exceed it.

SPX Weekly - Critical juncture

On April 29, i wrote


If we get a daily sell signal at any point now and a strong selloff, it would leave a nasty diveregent top on the weekly charts. It would also produce a daily/weekly combo sell. Now i have no clue whether that will happen or not. It's just a hypothesis at this point. So i call it a wave C and a terminal wave of this bull market. No Ifs and buts. Now i ask the weekly RSI to prove me wrong.


I got the sell signal on daily on May 5, which i posted on traders-talk.com. Sorry i have not been actively updating this blog as i am very busy with my trading .

Daily sell on May 5


SPX is at a critical juncture on the weekly charts. So i thought i would post an update to my April 29 post. If we break below SPX 1318 this week, then my system will go into a weekly sell this week. A daily/weekly sell combo is a dreaded thing. If SPX has any intentions of making a new high, 1318 is a must hold this week. Otherwise the back of the bull market will be broken. Trade safe !

Final bull market wave in progress

My April 11 call for a daily sell was good for 30 points, but it turned out to be a minor consolidation in the ongoing wave C, as opposed to test of 1249 which i was expecting (which i have noted in the charts).

I have a daily buy again at SPX 1332, which i could not update in a timely manner as i was on a vacation.






Here's a weekly chart of SPX from March 2009. Every new recovery highs in S&P on the weekly charts have been followed by a new high in the RSI. This is the first time since the rally begun in 2009 that a weekly RSI has started to negatively diverge with the price. That's a wave 5 or a wave C phenomenon, not a wave 3 phenomenon as some analysts who have been labelling it. Now the burden of proof lies on the RSI to prove that it's a wave 3 and not a terminal wave of the bull market. If RSI does make a new high in this leg, then the bears will have to go to hibernation, not for months, but for more than year. It's a historic juncture for sure. Since we are talking about weekly charts here, this current rally may continue for a few more weeks before topping out.

If we get a daily sell signal at any point now and a strong selloff, it would leave a nasty diveregent top on the weekly charts. It would also produce a daily/weekly combo sell. Now i have no clue whether that will happen or not. It's just a hypothesis at this point. So i call it a wave C and a terminal wave of this bull market. No Ifs and buts. Now i ask the weekly RSI to prove me wrong.

Now as for the ST, SPX is on a buy-the-dips mode and i would keep playing only the long side until the daily issues a sell.

I will post the next daily turn in real-time here, as it could turn out to be a very important one.

Quick update - Daily sell

Just wanted to post a quick update that i have a sell confirmation on the daily charts. This has implications on the wavecount, which i will update during the weekend.

"V" Bottom ?

My Feb 23 post called for a turn at SPX 1307, for end of wave 5. That also completed a wave A from the Sep 2010 bottom. The call turned out be a good one and since then SPX lost about 60 points into SPX 1249.

The reversal from 1249 was brutal and caught me by surprise. There was no bottoming action whatsoever. March 24 close at 1311 turned my trendicator on daily charts from downtrending to uptrending. So minimally we have a challenge of the 2/18/2011 highs at 1344 and possibly higher than that. Now just because my trendicator turned to uptrending does not unequivocally say that a "V" bottom is the case. But i don't like using alternate count to hedge myself if i am wrong. It is what it is. As a trader i need a firm bias to trade. From a trading viewpoint, SPX 1311 close was a buy point. Any dip can be used to add more. A break below the March 24 low at 1297 would be the stop for the trade and would also put a "V" bottom in question. For now both the hourly and daily are trending higher and the trade is long. If anything changes, i will post a quick update here. Here's the updated e-wave chart

Turn - Feb 23

In my Feb 02 update, i had called for a rally extension to a max of SPX 1360. Looks like 1344 is all she wrote ! Today's action generated a sell signal on the daily charts, which means the wave 5 extension is likely complete. I will posts the updated e-wave charts later...

- Good luck trading !

Wave 5 extension

That violent reversal on SPX invalidates my 1/18 turn call for end of wave A. I will have to file that under "failed call". I have noted that accordingly in the chart. The turn ended up as a minor consolidation in wave 5 instead of wave a ending and starting a big correction. So the wave 5 extension continues. If we are in a fifth wave extension, we could go all the way up to SPX 1360. I will not make a guess on the targets. Instead i will post an update when the next turn occurs. So now the context switches back to buying-the-dips.

Good luck !

Market thoughts

There is no change to the wave count since the turn call i made last week. 1/18 remains the top of wave 5. If the 1/21 to 1/26 move was impulsive, i could have moved the wave 5 top to 1/28. But it's clear to even a non e-waver (look on the hourly charts) that the move from 1/21 to 1/26 was a corrective 3-legged structure. So technically 1/28 is just a irregular top in the ongoing wave b correction. Anyway, labeling apart, it does not make any difference to the implications of the ongoing correction. Corrections after a 5 wave rally retrace to the wave 4 area. wave 4 area in this case is between 1227-1173. So the market should find support somewhere in that area before the next up leg i.e wave C begins, which should run into the spring/summer.

I had made a call on Gold near $1315 that GOLD would drop about $200 based on many technical warning signs on the daily and weekly charts. There were barely any bearish Gold technicians then and when Gold dropped into a wave 5 bottom last week, there were a barrage of bearish postings on GOLD on many message boards. The brutal reversal on GOLD cleaned out all the late to the party folks. GOLD is still not out of the woods. If we trade above $1358 and hold last week lows, then it will confirm that a bottom is in place in GOLD and we should see new highs on it. More on that next week.

Good luck !

Turn - Jan 19, 2011

In my Jan 5 post, i had mentioned that wave 5 top was still pending and i will update once a turn occurs. There were a couple of hourly sell signals since then, but no damage was done to the daily structure. Today finally i have a sell on the daily charts and a completed wave structure. So the back of the uptrend from the Sep 2010 can now be considered broken. A multi-week intermediate term decline should now be the expectation.

From a e-wave perspective, wave A of the rally has topped and wave B is in progress now, which should ideally take us to the 1160-80 area.



Good luck !

SPX e-wave - Jan 5, 2011

The wave count that i posted in my last update remains in force. Wave 5 is close to completion, but a turn is unconfirmed yet. SPX 1251 is the key pivot to hold at this point. We may have another day or two or sideways consolidation and one more upthrust after the payrolls report, before heading down in earnest. So the trade is still "buy-the-dips" above the 1251 pivot. Whenever the turn occurs, i will post an update at the EOD.

E-wave count for SPX - Dec 28, 2010

Sorry, i have not been actively blogging the last few months. I will try to post the e-wave count for SPX going forward, both on a weekly and daily basis.

On the weekly charts we are close to completing the wave a (currently in progress). After this a multi-week correction should be the expectation. But this is not going to be the end of the bull market. There will another leg up after this correction into the spring of 2011 before the fat lady sings.



On the daily charts, we are approaching the end of wave 5, which should kick start a multi-week correction. Use extreme caution here, if you are long. Tighten the stops to the SPX 1232 pivot. I will update here when the turn is confirmed.

SPX LT Oscillator - Close but no cigar !

Here's a long term Oscillator, which i have been showing on this blog for many years to track the LT turns. Well, since my system on SPX is proprietary, i cannot display any of my trading charts. So I decided to at least post this long term Oscillator for the benefit of those who are into LT investing. This Oscillator is not of much use to a trader as much as for an investor. But it certainly can be indicator to demarcate bull and bear markets.

The rules are pretty simple.

1) For a bear market, we need to have a lower high and lower low on the weekly price charts and the Oscillator has to cross below zero.

2) For a bull market, we need to have a higher low and higher high on the weekly price charts and an oscillator crossover above zero




This week, the market was on the brink of a LT breakdown, but escaped marginally. What the LT bears would not like to see here is a curl up of this MACD above the signal line, which would give back control to the bulls.

In my last post, i had said that the strong rejection from 1130 pretty much nailed the 9 month cycle top. Now the failure to break the SPX 1010 lows and a strong rejection from there pretty much neutralizes the situation. In other words, we are back to square one. My guess is we will double top around the SPX 1130 area and start the next leg down into the 9 month bottom lows due late Oct. But that's just a guess at this point. In a week or two, the market should start giving additional clues.

Good luck trading !

9 month cycle top confirmed

There was some ambiguity as to whether the May top at SPX 1173 or the the June top at 1131 was the 9 month cycle top. The strong rejection from 1131 pretty much confirms the 9 month cycle top. We should head into the 9 month cycle bottom from here, due in late Oct-Nov

My trendicator also moved to a sell yesterday without a CIT. It's going to be very hard trading this coming volatility with the daily charts(or daily trendicator). By the EOD, a lot of damage can happen. I will start posting the hourly buy/sell signals on traders-talk.com, for those interested.

I will post occasional updates on the daily trendicator here and some big picture thoughts.

Quick update

The trendicator remains on green status.





Given that S&P is trading below 1131 June highs, it still remains ambiguous as to whether the May 1173 or June 1131 highs constitute the 9 month cycle top. S&P has been forming a triangle over the last few days on the hourly charts. Triangles precede terminal spikes. So we could see most likely see a celebratory spike over the next few days above 1131, before we say adios to this rally.

In the event i get a CIT warning, i will post an update here.

9 month cycle thoughts

On July 28, i wrote

If today's lows gets taken out, then it would generate a sell with a projection to about SPX 1080-85. I don't see any projections beyond that, at this point.

We acheived that projection. But the trendicator moved from a sell to a outright buy today, without a CIT warning, in a shock and awe style upmove.



We have a 9 month cycle bottom which is due in late Oct - early Nov 2010. Every 9 month cycle bottom after the Oct 08 bottom have made higher lows signifying a cyclical uptrend in prices. In May 2010, we broke the 9 month lows of Feb 2010, and consequently the cyclical uptrend, which indicates that the next 9 month cycle low will potentially be a lower low.

The 9 month cycle crest is amibigous here. It's either the May 2010 top at 1173 (if the cycle was left translated) or the June 2010 top (ideal top) at 1131. Now we are 4 points away from the June 2010 top. Will it hold ? If it was a 9 month crest, it should reject prices strongly here. If not, it would confirm that May 2010 was indeed the 9 month crest and prices should move towards there for a retest and then fail there for a downmove into the 9 mont bottom due late Oct.

If SPX 1173 gets taken out, then the bearish case is over. That would mean a extremely right translated 9 month cycle and the implications are ultra-bullish.

The trendicator is on a buy. So we are back to buy-the-dips mode. But keep an eye on the 1131 and 1173 resistances and watch how the price reacts there. If we see volatile back and forth action below the resistances, then it's a clue that a potential top is getting built.

Good luck !

Trendicator moves to red

Trendicator moves to red, following the CIT warning yesterday.

CIT warning

My trendicator has given a CIT warning. CIT warning is not a definitive sell signal. But usually a CIT warning translates into a sell signal the next day, if the low of the daily candle that triggered the CIT, gets taken out. So if today's lows don't get taken out tommorow, then it was much ado about nothing. If today's lows gets taken out, then it would generate a sell with a projection to about SPX 1080-85. I don't see any projections beyond that, at this point.

Well, the upcoming 9 month cycle bottom due in Oct-Nov timeframe is in the back of my mind. But it's too early to say that this is the start of that big decline. Weekly has to turn down before such forecasts are made. At this point the weekly is pointed up. So i will treat this as a correction in an uptrend.

No change

Power uptrend continues...

Power trend

Just a quick update. We had a big up day as i posted yesterday. My trendicator has entered a power trending mode now.

Here' some quick details on what a power trending mode means. Power or strongly trending markets are those, where the odds of sucessfully executing a countertrend swing trade becomes extremely low. It does not preclude one from intraday countertrend trades or quick scalps, but is unforgiving when it comes to trying to swing against the trend. Power trend does not measure the size or duration of the move. The move could run for months or end even after a day. It just attempts to charaterize a trend which is in a high momentum zone. So it pays to wait for a potential CIT or actual CIT before any countertrend swing is attempted from this mode.