Sorrows of young Trader

May 21st update

mdm — Mon, 21 May 2012 23:55:19 +0000

Finally, it looks like the bounce has started. Both euro and SPX, deeply oversold, rallied today in a convincing manner. Some uncertainty remain about the near term count, but i’ll try to spot the end of this rally (that should have some leg in the next few days)

Euro

If Friday’s low is the end of wave (3), then this is wave (4) and should stay under 1,30. If this is just wave 1 of (3), then it could go little higher, between 1,3045 (61,8% of wave 1) or until 1,31 to backtest the neckline. Today it should have complete wave A of this correction, so is it possible to see a modest pullback in wave B before grinding higher.

SPX

Here i could see many possibilities.

- the recent low is wave 3: now we are in wave 4 and should stay under 1356 (w1 territory)

- this is wave i of wave 3: the bounce will go until 1368 or little more in wave ii of 3 before crashing

- this is a complete A (insted of 1) – B (insted of 2) – C down, and this bounce will lead to new highs.

I remain with the bearish view, but i see both first and second options as equally likely. I’ll need to see the subwaves of the bounce before committing to a target for the bounce. I think it will clarify in 2 or 3 sessions.

i know i’m neglecting gold and silver recently, given that they were my point of strenght in the first months of this blog. But i’m still doubtful about the near term (both failed to retouch december lows) so i don’t want to commit. However i’ll try to formulate a bearish and a bullish option in the next posts.

A textbook setup

mdm — Wed, 16 May 2012 22:47:00 +0000

Wandering between various charts, i noticed a textbook example of impulse-retracement. It was Eur-Jpy, showing a five wave advance (impulse) from a low, and a three wave retracement (correction) from the end of the impulse.

Being a daily chart, it offers a very good opportunity. It could be a A-B sequence or, better, a 1-2 with either a wace C or a wave 3 coming. The typical retracement for the two sequences is 61,8% of the impulse, and we are already there. The only limit for wave 2′s is the start of the impulse, but they usually stops between 61,8 and 78,6%. Analyzing the correction, it has a typical zig zag form. A common relationship is that wave C will be equal wave A. This happens around 101,1.

So, from this area surrounding 101-102 it should start an upmove to above 112 and probably a lot more. I never traded EurJpy, but i will try to analyze subdivisions of wave C to spot a good entry. I will update about it soon!

Euro Update

mdm — Tue, 15 May 2012 23:43:56 +0000

Being bearish for months, in the last couple of days i tried to identify a countertrend bounce subdividing the current impulse down. But i failed to remember a golden rule: in a wave 3, especially at different degrees (this is supposed to be a iii of (3) of 3, never try to identify the end of the move. The initial target i gave for months is 1,255, and under 1,19. So below there is the updated chart i posted some time ago. Stick with the trend for now, if a bounce occur i’ll try to identify its end.

SPX update

mdm — Mon, 14 May 2012 17:57:31 +0000

Looks like SPX formed a triangle in the past sessions, before breaking down today. Trinagles are in 4th wave position, so the so-called “thrust” out are terminal moves leading to a reverse. So, this confirm my bounce scenario from here or after another marginal low (but i think it’s a low probability).

If the bounce finally starts, we should see how SPX will react to the squared area. Right now, i prefer a reverse there and a strong acceleration down, but i’ll reassess when it will go there

Same scenario for euro and Crude Oil, even if the latter will confirm the reverse passing 95,7. Before that, it has a good probability of needing another one low before heading strongly up

Weekend update

mdm — Sun, 13 May 2012 23:47:14 +0000

There weren’t great developments in the past two sessions, so despite the new low in Euro, il stick with my previous projections that we are probably going to see a bounce before any substantial drop. The way i counted the impulsive structures down allows for another one low, but nothing has changed so i won’t post new charts being valid the previous.

Obviously, consider that i’m waiting for a countertrend bounce, that could not be deep as textbooks require. So always remember that for now risks are to the downside. I think tomorrow will be telling, so i’ll post charts tomorrow night.

Have a nice week

May 9th update

mdm — Wed, 09 May 2012 20:35:01 +0000

Euro finally broke down and ES made new lows, as predicted in last few posts. But now both show a complete impulsive structure down that should led to a at least short term bounce.While for the intermediate bullish case 1,33 (euro) and 1.415 (spx) remains key levels, we could identify a target range IF the bounce develops.

Euro: five wave down, it could at least backtest the neckline or slightly above until 61,8% retracement. Boxed area is 1,306-1,315; after that, a strong decline should led to undr 1,26 in few days. Be careful managing this supposed bounce as risks remain to the downside

Same structure for SPX and ES: five clear waves down. In this case, the most likely retracement area is 1378-1389. This time SPX shows the same impulsive structure as ES

The same bounce could develop same way in Crude Oil, that after the strong decline shows a triangle, almost or already completed. Triangles are always 4th (or B) waves, so even there will be another one low, it will be fast and reversed.

I missed the move in metals, but the overall count is still “problematic”. However you could find in old posts (clicking the metals tab) how was the bearish option and where there could be reasonable target if new lows are made.

May 7th

mdm — Mon, 07 May 2012 22:55:28 +0000

There weren’t updates as Euro and SPX followed projections. Today there are clearer subwaves, so it is useful to post new charts.

Euro broke under the supposed neckline, after a strong selloff that should be a small wave iii. Today’s bounce is probably due to fill the gap and backtest the neckline. The critical level, as said remains 1,33 but in the current count new lows are imminent before any other significant bounce. Intermediate target is still under 1,26, probably under 1,19

SPX is developing an impulse down, bouncing in a small wave iv that could be complete or needs to go around 1380 before going under 1357 (cash index)

Silver is still struggling with the support area around 30$. The entire move since 37$ doesn’t show a clear impulsiveness, so unless it breaks hard (a -7/8% day), it could surprise to the upside from this area. I will chart it in the next few days

May 2nd

mdm — Wed, 02 May 2012 23:26:03 +0000

I’m sorry i’m not too much present these days but they were European holiday. The market is quite boring chopping without direction, and it is the worst environment to make IT projections everyday with EW. So the only news is that in respect of recent views on Euro and SPX, we have levels that should hold to mantain bearish forecasts: yesterday’s highs. If a trend change occurred, 1,3285 and 1.415 should be respected. Charts below.

For Euro, the drop looks impulsive and should finally represent a downturn. A break of the supposed neckline should add strenght to the move, leading to sub 1,26

Same kind of count in SPX

Finally will we have a significant move? We’ll see

Euro & SPX update

mdm — Sun, 29 Apr 2012 22:48:43 +0000

Things are getting late to clarify. There is still no change in euro count, but it should turn very soon to confirm otherwise some other possibility should be considered

Exactly the same for SPX. If the recent rise is an ABC correction, it should end right here. Otherwise, tomorrow will be a strong up day as in the alternate view we should be in a small third wave of a rise towards new highs

I think tomorrow will be telling, one way or another.

April 25th

mdm — Wed, 25 Apr 2012 15:15:04 +0000

Still sticking with bearish scenarios for Euro and SPX, even with latest gyrations. No change in counts as they are still wandering around the critical levels indicated in last few posts. Especially for the dollar, today’s Fed meeting could give one direction.

Crude failed to breakdown but could still be a series of wave 1-2s

Still no committing with Silver (see previous posts) but the short term last drop looks impulsive and needs at least another one love (and 30,50 is an important level for intermediate term too)

Let’s see if the Fed kill those gyrations days giving one definite direction