Monday, April 5, 2010
S&P Finishing up a Thrust from a Triangle that Started Last Week
The market appears to be in the final subdivisions of a thrust from a triangle that started last week. Looking at the daily, you can see that it's possible to count the rise a completed 5 wave advance already. But looking at the smaller timeframes, it appears we are still going to edge higher at least one more time.
Above is just a close up of the triangle structure. Normally, thrusts from triangles are very sharp and straight affairs, however this thrust is quite elongated as you can see from my intraday chart above. Notice that wave i. is very strong as it burst out of the triangle, but then it was sold aggressively for wave ii. Then wave iii. was another strong burst higher, only to be met with a brick wall that made the market move sideways the rest of the day. To make a perfect 5 up from the triangle, I'd like to see another sharp burst tomorrow. This would be a good opportunity to start getting short in my opinion. Thrusts very often reverse immediately to the apex of the triangle, and in this case that would be around 1171 level. So my strategy is to ease slowly into short positions on the S&P and then load up on signs of a reversal in order to ride the market down to at least the 1171 area. It may snowball into a bigger decline from there and that would be more than okay for me, we'll see.
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.