For my index trading methods I look for 3 stages to confirm a trade:
1) Signal on the index
2) Signal on the VIX to confirm the index signal
3) Confirmation on proprietary indicators
Right now, states 1 and 2 have been met as both the S&P cash and the VIX have fired off bearish setup signals. Now I'm just waiting for a confirmation move by the S&P. Preferably, for the best trade, I would like the S&P to traverse sideways to up for a few days before triggering the signal to short. This would provide the best profitability. I'll post it here when the bearish signal is confirmed. Once hit, I expect at least a 40-50 point drop.
So the head and shoulders top I projected has now failed and is removed from consideration. I believe wave (4) is complete, although very shallow. This means we are in wave (5) of ((3)). In using channeling and wave ratio analysis, I see that wave (5) will equal wave (1) at 2108, and that is also close to the channel top. I can easily see the market getting to 2100-2110 and then reversing short of the upper channel line. I will rely on my proprietary indicators to identify when a top has occurred though, and when I should short. Until then, I will patiently wait.
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PLEASE NOTE: THIS IS AN ELLIOTT WAVE BLOG EXPRESSING AN OPINION AND IN NO WAY GUARANTEES OR IMPLIES ANY PROFIT OR GAIN. TRADE AT YOUR OWN RISK.