JB3 here. Sorry I can't post more often but it's physically impossible for me at the moment (he says as he peers, albeit lovingly, through the cracks of his red bloodshot eyes across the room to his lovely little 5 month old girl).
Well... back to business. I'll focus more on Elliott Wave based ideas, because Atilla and Sol do such a fantastic job at everything else that there's not much more value I can add.
First, an update. Earlier this week I shifted my ES/SPX shorts over to NQ/NDX shorts because, all going according to plan, NDX should outperform SPX and the DJI to the downside. Yong Pan (aka Cobra) sums the situation up well with his QQQQ/SPY ratio chart here.
But since Thursday I began to reduce my NQ shorts, and eventually closed them all on Friday, because to me the Elliott Waves (which have been serving me extremely well since the top at 944) and various nearby support/resistance levels (and gaps) indicate that there is high probability that taking profits now and reloading shorts at higher levels.
Now, for some prognostications:
From an EW point of view, these are the top 3 scenarios I see unfolding from here, and I'm treating them all as equally likely:
1. Tiny bounce stopping at about 785ish and then the impulse extending down in an accelerated fashion, probably leaving more gaps. I haven't got a sketch for this one.
2. Small bounce, followed by new lows (possibly around 740) and then a bigger bounce before the next wave of the capitulation. See chart below (the dark blue box is my ideal targets, the lighter blue is my next most preferred targets):
3. The bounce that began on friday continues immediately to the targets as drawn below:
For the record, there is another more bullish scenario that I think is highly unlikely but I'm keeping it on my radar - a C wave of a flat pushing up towards 920.
Also, I hope most EWavers would agree that a triangle should not be considered as being in play any more because the DJI and OEX have broken the Nov 08 lows.
Well, that's about all I've got time for at the moment.
FYI: Although I have closed my NQ shorts, I am still short a bunch of stocks and indexes:
Short CFX (Australian RE Stock) at 1.71 and 1.795
Short AZO from 139.36, and looking to add if it goes higher - but I think upside is limited
Short BBBY at 24.39 and 25.10 (small position) and will add if it goes higher
Short FPL from 52.22
Short MA from 163.77
Short RIMM from 58.99 and have been adding as it falls
Short V from 55.46
Short XOM at 77.66 and added at 80.88
Short ASX S&P 200 futures from 3480
Short Nikkei futures from 7802, adding on the way down.
Also short a CFD version of XLE, riding the exit from the triangle
This week I also took profits on QCOM, and German DAX futures shorts and will look to re-enter at appropriate levels.
On friday I also closed my long term Natural Gas longs at a loss as there has been a key break below critical support levels at 4.03, which broke my trading plan. The new plan is to re-enter for the long term below 3.62-ish, with the understanding that it may go as low at 2.0-ish so I'll keep plenty of powder dry to add. I would like to see these lows in Natural Gas coincide (roughly) with the impending IT bottom in the SPX.
This state of affairs with Nat Gas, Oil, TAIEX and other charts I watch further confirm a longer term deflation scenario and reduce the probability that we'll see inflation any time soon. In the long term, recent action convinces me even more that the USA and many other major markets (esp European mkts) are entering depressions (some are already in them, albeit not officially recognised) and these depressions are bigger (possibly much bigger) than the Great Depression. That said, I'm no sell-out to any thesis... if future action dictates a change in stance, I'll change.
All the best,
JB3
No comments:
Post a Comment