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Once again, the theme of the week at TTC was not to marry an outlook or a position, but to trade the market as it’s given, buying lows and selling highs. More importantly, an unbiased trader this week continued to avoid selling into the holes or buying the forced rallies – two priorities that continue to make profits for our members. Tuesday’s trading ended strong, and probably saw most either covering into the bell or going long. We, on the other hand, were up late putting together the next day’s map, which had us looking to buy the market the eight points lower. Sure enough, the globex session didn’t believe in the painted rally either, and with an eye on China, helped us get to our area by the time we woke up the next morning. Being able to see Wednesday’s drop as a buying opportunity and then anticipating Friday’s exact high are perfect examples of how our unbiased method keeps us from marrying a particular bearish or bullish posture just for the sake of consistency and allows us to update our counts in realtime. The pattern we were trying to use Wednesday morning had us watching 1514 in the S&P futures as the market knifed down, taking out all the longs. We didn’t get confirmation of the triangle that morning, but still bought the selloff based on this chart, which was quickly posted 6 minutes after the open. This sort of fluid reaction to the market, “on the fly”, is exactly what our members have come to expect and respect from realtime “unbiased” trading.
As everyone once again thought this was the big one again, permabears in particular, we noticed support appear at the exact 1x1 area and recognized a possible low risk long entry.
Once the Fed minutes were announced and the Futures weren’t able to take out the 1519/18 area, we were comfortable to do a little chasing. Of course, as it happened, once the upper limit of the day was taken out, the bears were in trouble, again. Thursday was another terrific day as we wanted to buy the day’s low and stay long into the payroll numbers. Oftentimes, that’s a risky situation, but not if you’re trading the roadmap. As one of the members went on to say in the chatroom Friday morning after seeing the morning gap confirm our expectations, “this is like having tomorrow’s newspaper.” This is what he was talking about:
The SPX went right to the expected level before rallying into the close. I then posted this next chart showing confirmation of the perfect turn we had expected, along with an idea of where to place our sell order for the morning gap.
The only question I was asked was how I knew the payrolls number would be good. Only half-jokingly, I answered, “Oh, we have a report due out?” Members know that’s my little way of saying news doesn’t move markets, Elliott and Fibonacci do. Knowing where you are in the pattern before a news event hits – that’s what really counts. How else would I have said that we wanted to be long into the report, which will produce a gap up, and get exactly that? The chart below shows our perfect trading over those two days.
Basically, what we got was exactly what you read in last week’s update. “Going forward, I don’t think the violent moves we saw this year are about to calm down now that the struggle to put in a top is about to begin.. I’d rather see more of a pullback soon, but, after seeing what’s been going on in this major index, it’s questionable. "More and more, I’m in the camp that says we need to keep an open mind to the possibility of an additional high in the near future. If so, you haven’t seen the fireworks yet! A move from our targeted areas will rocket up like the Macy’s 4th of July show. Come to think of it, that might also be a nice time for a turn just about there. It’s also where we plan on instituting the price increase we’ve been mentioning.” It sure paid off this week to be looking for a new high instead of a fresh low. Week after week the S&P come closer to where I think they are reaching for. This week they reached within twelve points of a new high – a total nightmare for many of the biased traders! A life time of fortunes were made going down into the 2002 lows and then back up to twelve points from the old high in the S&P 500. One of the markets we keep an eye on is the Dow Jones Composite below. As you can tell, this market has not struggled with up and down chop and has taken out the past highs long ago. We are monitoring what it will do with this Fibonacci relationship that it has reached.
So, we’re going into the next few weeks with a plan and are looking forward to seeing it realized. On the contrary, most traders will probably be in for a few weeks of very frustrating trading before the final curtain falls on this rally. But, before you, or your account, take the plunge, it’s time to evaluate your own trading style. If you haven’t made some handsome profits this year, it’s time to really think about what you’re doing wrong. Do you commit to an outlook or a position and dig in further if the market proves you wrong? If you’ve watched from the sidelines as the markets screamed higher or if shorted a rally from the 2002 lows only to watch the S&P recover all but 12 points of the initial decline – it’s time to try something new! This week we found new ways to present our work to a very rapidly growing number of members, as well as making a statement about what I think we’ll see in the near future. I’ve also expanded the trend charts to end-of-day coverage on 24 markets! Don’t think that’s worth the price alone? How about being short this market 2 years because this chart said too? The picture is worth a thousand words.
Gold The chart back from April gave you a fifty-point rally in gold and nailed the reversal! Sluggish action in the metals have kept some traders skeptical, but now gold and silver have both closed above a key level. Be sure to read Joe’s Precious Points update for what’s next! Have a profitable and safe week trading, and remember: “Unbiased Elliott Wave works!” Dominick
Market
analysts are always welcome to contribute to the Forum or newsletter. Ideas from this update are provided as general information and are not investment recommendations. TTC accepts no liability whatsoever for any losses resulting from action you may take based on the contents of its charts, commentaries, or price data. Each person must do his or her own research to determine the appropriateness of taking a position in any financial or commodity market. If you are uncertain, please check with your licensed financial advisor or broker prior to taking any action. Securities and commodities markets inherently involve risk. CONTACT
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