For Wednesday

Expecting a choppy non-trending day as most traders are out of their office for the end of the year holiday, with FT Pivot 2228.75 as Line-in-the-Sand Level for bull/bear bias

Tuesday Chart

On the 5-minute chart, today's open was a wave 5 gap-up from Monday's low, hence a prime candidate for a short, looking for ABC correction down to i) Gap-Closed and ii) FT Pivot.

FT Pivot should act as a very good Line-in-the-Sand Level for the balance of the trading day.

Prep Chart for Monday

Looking for choppy non-trending type of days during the holiday sessions as most institutional traders would be absent. Without a very large opening gap, I will be using the following 5-minute chart as a trading pattern guideline.

Bangladesh Investors Riot Over Stock Market Fall (BBC Report)

Recent report by BBC about the recent plunge in the Bangladesh Stock Market may be a warning to the rest of the world, as it may be a prelude to what is coming. As the Dow, S&P and Nasdaq flirt with Pre-Lehman Brother's collapse, investors sentiment is at an all time high, a signal that the markets may be near their top before the next leg of the bear market resume.

Excerpt from BBC report:


"Hundreds of angry investors have staged protests in the Bangladeshi capital, Dhaka, after the stock exchange saw its steepest ever fall in a day.

Reports said they threw bricks at police, marched in the streets shouting slogans, and staged a sit-down protest.

Shares in the stock exchange suffered large falls within hours of opening on Sunday as panicked investors went on a selling spree.

The index ended the day down by 552 points or 6.72%.

It has been on a rollercoaster ride in recent weeks, hitting a record high on 5 December, having climbed 80% since the start of the year.

But on 8 December it nosedived, prompting protests in Dhaka and towns elsewhere".

Full report here: http://www.bbc.co.uk/news/world-south-asia-12033373?utm_source=twitterfeed&utm_medium=twitter

30-Minute Chart

Today, NQ continued to be bullish as every dip down to FT Pivot was bought. However it was not able to push above trend-line resistance. As long as trend-line and /or FT Pivot support continue to hold any decline, tomorrow's price pattern may be a repeat of today's.

Nasdaq (NQ) and S&P (ES)

The 30-minute chart is showing that both markets are in wave 5 of 5 and approaching trend-line resistance.There is a possibility that we may get some pullback down tomorrow. However, any pullback may be short-lived and a buying opportunity ahead of the holidays.

30-Minute NQ Chart

Today's early morning decline stopped right at the Equilibrium Level, just above wolf wave trend-line support, and hence a great opportunity to go long.

On Tuesday, I will be looking for s shorting opportunity on any gap-up that is not confirmed by internals, and a buying opportunity on any gap-down opening not confirmed by extreme bearish market internals.

Nasdaq NQ Daily Chart

On a daily chart, Nasdaq is currently in a mature phase of wave 5 of 5 from its July 2010 swing low. The current wave 5 uptrend may want to continue on into January 2011 before topping, but it can top and reverse down at anytime now.

I will be looking for a wide-range bearish candle for a sign that the top may be in place. Once the top is in, I will be looking for a larger ABC correction that can take price down to breakout level (per chart) before rallying back up to test the high or higher high I think would occur sometime in March 2011.

5-Minute Chart

On an intraday basis, here is my 5-minute chart showing the potential patterns to look for on Monday.

30-Minute Chart with Wolf Wave S/R

30-Minute NQ chart showing near-term potential Support and Resistance Levels to watch.

NQ daily Chart

On the daily chart, NQ is still in its wave 5 of 5 up from the July 2010 low. Once completed we should get a larger ABC wave correction down to  test the April 2010 swing high.

At the moment, I am looking for the current rally to continue into the new year and make an intermediate top sometime in January 2011 before pulling back down in an ABC pattern. Once ABC wave down is completed, I would be looking for it to try to make a new high into March 2011, as long as the bullish pattern is still intact.

Thursday's Recap

Nasdaq NQ has been trading inside a 30-point trading range between 2195-2225 for the last six trading days. It should either breakout above 2225 and then trend up, or reverse back down to test the lower trading range at 2195. Either way, a trending day should be coming soon.

S&P emini (ES)

A very clean and clear 5-wave structure rally for the ES. After completing wave (v) of 5, it promptly reversed down in a nice 3-wave decline. Tomorrow morning we would be looking for ES to either drop back down for its wave 5 before rallying up, or rally up to test the high before dropping back down.

Wednesday re-cap

With the market opening gap-down the first trade was to go long targeting gap-close as the first upside target. As always, breaking above gap-close level implies the morning trend was up. A break above prior day high that failed to stay above was followed by a swift reversal down in a nice and orderly 5-wave decline.

Key levels to watch for on Thursday are 2220 as resistance and 2200 as support.

Tuesday's Recap

With the market opening inside prior day range with a small gap, a choppy non-trend type of day was to be expected. Upon closing the gap and re-testing prior day low the market promptly rally to the Point-of-Control area at the .786 retracement level. There were several failed attempts at breaking the POC resistance level  before reversing back down breaking below the morning low. True to its choppy nature, after breaking below the morning low the market promptly rallied to close near the day high.

As for tomorrow, the key Line-in-the-Sand Level to watch for is the POC and the .786 retracement area at 2220 to the upside, as a break would imply a likely move up to higher-high above Monday's swing high. However, a failure to break above the LIS resistance level would imply a likely decline to test today's low or even a move to below today's low.

Monday's Recap

Today was another very clear day for trade entries and exits, as the market opened gap-up on its final leg of wave 3 which started on the 9th of December. A gap-up provided us with another easy decision for a short trade right at the open, targeting gap-close.

At gap-closed, an exit and reversed long was a prudent decision to make as gap-close was   also simultaneous with a test of prior day high, which at that time served as a support level for at least a bounce to test day high or higher high.

A second test of prior day high that failed to break through implies the morning trend was up, which was exactly what happened. A break above the initial range high that failed to follow-through to the upside implies wave 5 of 3 might have ended, hence a prudent strategy was to look for a short that should take price down to the balance point (pivot). A very large sell program must have panicked many bulls as price easily crashed down through pivot support.

Nasdaq NDX Big Picture

On its weekly chart Nasdaq NDX is in its final wave 5 of 5. Once completed the bear market that started in 2007 should resume.

SPX Daily Chart

From July low, SPX is now on wave 3 of 5 up. There should be one more pullback (wave 4) that should then be followed by wave 5 of 5 (higher high), targeting 1281.16 area.

The Big Picture -- SPX Weekly

On a weekly chart, from its March 2009 swing low, SPX is in its wave 5 of C up. Once completed it should lead to the continuation of the bear market trend that started in 2007.

Friday's Re-cap

NQ gap-up open inside prior day's range provided us with a very low risk shorting opportunity at or near the open, targeting gap-closed area. That was exactly what the market did. It then rallied after closing the gap, and it looks very obvious that it was a wave 3 rally, implying that it should close at or near the high of the day, and that was exactly what the market did, as all indexes close at or nears their respective highs.

Here is NQ 15-minute chart showing what to look for on Monday.

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Important Bull/Bear Chart

From KWN Blog, "This is an extremely important chart from Investors Intelligence showing 10 years of up to date Bull/Bear surveys.  From their report",
“The Investors Intelligence Advisors Sentiment Survey bull-bear spread is once again moving towards the +40% danger zone. When the spread last broke above 40%, in October 2007, the market collapsed spectacularly.”  

The chart above is in sync with the market "Time Cycle Top" in March 2011.

Thursday's Update

Today's large gap-up open but still inside the trading range was an indication that we would likely have a non-trending type of day, providing us with a great opportunity to fade the opening gap by going short near the open, targeting gap-close and FT Pivot. NQ promptly decline in a 5-wave pattern down to pivot before reversing up.

Today was the third day price has been trading in likely wave 4 consolidation. Prior consolidation wave 2 lasted about four days.  If current consolidation is in fact wave 4, price should rally above wave 3 high today or Monday.

Wednesday Update

Today's gap-up open inside the prior day's price range was an indication that we would likely have a choppy non-trending type day, providing us with a great opportunity to fade the opening gap by going short near the open, first target was gap-close, then second target was a break below prior day low, which was what NQ did.

Because we were looking for a non-trending day, we would then look for a trend reversal. A break below Tuesday's low without any follow-through to the downside near 11:00 am confirmed a non-trending type of day, and provided us with the first clue that the trend reversal was in the cards. Our trade strategy was to look for an exit on our short trade, and then look to enter long on a pullback down. Our first target was a test of the morning high or higher high above morning high. We got the first target at the end of the day.

On an intraday basis, looking at 5 or 15 minute chart, NQ's price decline from Tuesday's swing high is still indicating a typical wave 4 retracement pattern, a choppy ABC Zig Zag down. The very shallow retracement so far, indicates two possibilities:

First, if wave 4 is complete, a shallow retracement is an indication that wave 5 would likely be a strong wave. Second, if wave 4 is not complete, we may get a down day tomorrow, with price dropping down below today's low towards the .382 - .50 retracement area (see attached chart).

Note: Wave 4 usually retraces between .382 - .50 % of wave 3. Anything less is an indication of a potentially strong wave 5.

NQ daily Chart

From July 2010 Low, NQ is now on its wave 5 up, so far it has completed sub-wave (iii) of 5 (see chart). Although wave 5 should have 5 sub-waves, I have seen many wave 5 patterns with only 3 sub-waves, so caution is warranted here when looking for wave (v) of 5.

Once wave 5 up is completed, we would look for price to decline in an ABC-zig zag wave pattern to re-test the breakout level at around 2050 area. Upon successful re-test, I would be looking for NQ to rally into March 2011 top.

2011 should be the top of this current bull market. Once the top of this bull market is in, the vicious bear market should resume and bottom sometime in March 2012.

Tuesday Update

Gap-n-Crap

Tuesday open was a large wave 5 gap-up, a Gap-n-Crap type of open. It gap-up to the ADR level and immediately sold off in a 3-wave pattern down to close the gap and test of Ft Pivot. Wednesday's morning trend will be the key to whether the decline from Tuesday's high will be a 3-wave down or a 5-wave down.

ADR Strategy

Average Daily Range (ADR) Strategy Combines the 10-Day Average Daily Range with Floor Trader's Pivot, Momentum Bar, Market Profile, Opening Price and Fibonacci Number