Tuesday, March 23, 2010
Market Extends Higher, Looks Like a 5th Wave
I know many people would like to punch me in the face after I say that the market is finishing up it's rally since I've been saying that for about the last 100 S&P points to the upside. Trust me, I feel your frustration and my account has paid for it. I have been stumped on this rally more than any other in my stock trading career. This thing has seemed so overextended for so long but continues to float higher on practically no volume. Today there was less than 1 billion shares traded on the NYSE and the Dow pushes up 100 points, and momentum indicators continue to drag. But the market is always right, so with today's new highs across the board now I have to sit and wait for the next opportunity to get short on signs of a top. Right now I see no reason to get short right now as the market is still showing signs of strength, but getting long this late in the rally seems too risky. Once evidence of a top comes forth again, I'll mention it here as soon as I can and mention opportunities I think are worth taking. Above is a daily chart of the S&P that shows a simple 5 wave rally occuring, with us currently in the 5th and final wave of the rise. The rise can extend and be attracted to the 1200 resistance level, but there's no guarantee. My strategy now is to stand aside and wait for the market to present an opportunity. Unfortunately, right now I see none.
S&P 500 Cash Index 15min
Above is just a closeup of what the declining structure turned out to be; just a WXY double zig-zag correction. I think it's too early to start labeling the current rally from the wave Y low, but hopefully as the structure continues to unfold I'll have more certainty in the smaller waves so we can get a better idea of where to start looking for a top again.
Sorry I don't have more to say. But the last thing I want to do is impose my goals or needs onto the market, or take my frustration out on my account by losing trading discipline. So I just continue to play a lot of XBOX360 and watch every old movie in the book to keep my mind off the frustration I feel towards the markets so I can stay on track and remain focused on my trading plan and overall strategy.
PLEASE NOTE: THIS IS JUST AN ANALYSIS BLOG AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. THE DATA HERE IS MERELY AN EXPRESSED OPINION. TRADE AT YOUR OWN RISK.