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May 18, 2008

Market Update: Time to Decide
by Dominick

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This update has been neither cryptic nor ambiguous in its public announcements of a crucial deciding line in the tug of war between bull and bear market forces in the vicinity of 1440 on the E-mini S&P futures. As revealed in the chart below, originally published in February, TTC has long been aware of serious flaws in the bearish count, which seems to perpetually forecast a market crash to new lows just over the horizon. On the contrary, as last week's action showed, we instead see bears finally capitulating en masse after an almost 200 point run up in the market.

Though the market did decline to retest the January lows, those levels held, invalidating the Armageddon count of the bears and opening the door to an unmitigated bullish perspective. Regular readers know we also had a strong number that had us buying those lows. Even then, as always, TTC took an unbiased view of all possible scenarios, giving the bears their due, but also exposing the problems in their case. The bearish count was exposed in the top figure of the chart from March below as having serious defects, while two other bullish cases fit perfectly.

As you know, markets have rallied hugely off those lows, and have continued even very recently to catch many off guard by grinding suddenly and inexorably higher. But the result of the short-covering rallies that have lifted stock indices back close to flat on the year has not been to ultimately decide the future of the market, only to lift us to the place where we've long expected the bull/bear market decision to be made. Shorting a market that has clearly wanted to go higher has been premature so far, but with Friday's high a mere 10 points from my target, I believe we are finally in the area that must now be carefully watched as it will determine the rest of the year.

Several possibilities are likely from here, but the first, most important step to trading this area is to unlearn any bias about what the market should do. This is one of the qualities that makes TTC as effective as it is: without a bias we are able to listen to many different signals and indicators, and trade in either direction. Approaching next week with a blank slate will allow us to cancel out the market noise, focus on the charts, and execute winning trades.

Recent updates have also emphasized the value of our members-only real time and daily commentary, which epitomizes our rolling approach to analysis. By changing with the markets, we're able to put aside wave counting when appropriate and use our proprietary indicators and target levels to trade rangebound markets while others cling to fruitless expectations. We aren't married to our trades either, and because we frequently go flat, don't have to "talk our book" or defend some long-standing agenda. Every trader has at some point watched a gain turn into a loss. TTC, however, is populated with those who've learned to give up that nasty habit.

Of course, the other fact that makes TTC so profitable for members is that we can count waves and integrate Elliott wave theory with other techniques, as evidenced by our recent work in the euro, oil and gold. After having called a top in the euro and taken profits on the initial decline, we re-entered on the long side as the euro finally reached our initial diagonal target from the highs. As that market reached resistance we again took profits and, with thoughts of a major top still in mind, continue monitor the triangular consolidation for the next major move from the current pivotal area.

Crude oil has frustrated many traders with its unstoppable surge higher, punctuated with sudden fits and starts in both directions. Having reached the target high of our projection, we awaited confirmation before shorting this relentlessly bullish commodity. This week gave us the expected trade, outlined in the chart below, when support at 123 was lost as TTC members eagerly watched, ready to short. As support materialized near 120, we took profits on the trade and woke the next morning to new record highs, thankful for the call to TMAR (take the money and run). This market will continue to throw of as many as swing traders as possible, but through our disciplined approach we will look again next week for the coming swing trade and in the meantime provide our members with profitable short term trades in this and other highly volatile markets. For more on the current situation in gold, read Joe's Precious Points weekly update.

Many markets now sit at crucial inflection points with lots of potential energy that could break in either direction. Undoubtedly, the bears will again see their 3rd of a 3rd down coming and, with the market approaching significant resistance, perhaps they will get at least some action in that direction. But with lots of money still waiting on the sidelines and bearish counts at the point of breaking, what began as a short-covering rally could become a powerful bull market surge if important technical levels are taken out. The bottom line is that this is not a time to be biased, it's time to let the market decide where to go next and trade aggressively, as we will, from our target numbers, in whichever direction it might be.

With so many of our members making back their monthly subscription fees in days or hours, or less, it's safe to say TTC is simply the best risk/reward trade available. But now, we're making membership risk free with our money back guarantee. Because it can take time to integrate TTC into your active trading, we want you to have the opportunity to orient yourself, read the forums, chat with members and make an informed decision about whether we can help make you a better trader. Join this weekend and if TTC isn't the right place for you, cancel by Memorial Day and get your money back, no questions asked.

TTC is unique among market analysis sites in that it is configured as a forum wherein members actually participate in the analysis. Over the past two years we've been around, institutional traders have become an important part of our membership, exchanging their perspective and insight into trading techniques, psychology and money management. Even if you're not able to contribute to the discussion, your membership gives you access to the best real time, tradable analysis on the web at a price well below what other sites charge for much less. Going forward, serving our institutional membership will become our primary focus and in order to maintain our high standard of quality, we are forced to limit new retail membership.

But if you want daily updates on all these and other markets, if you want to learn how to trade short term time frames and access next week's charts posted in the weekly forum right now, it's time to decide now whether you will join the the TTC community of traders. The opportunity is quickly slipping away as we're set to close our doors Memorial Day weekend to all but institutional traders. If you're really serious about trading, learn more about what TTC has to offer, the time to join is now.

Have a profitable and safe week trading, and remember:
"Unbiased Elliott Wave works!"

Dominick,
a.k.a. Spwaver
TradingTheCharts.com

This update is provided as general information and is not an investment recommendation. TTC accepts no liability whatsoever for any losses resulting from action taken based on the contents of its charts, commentaries, or price data. Securities and commodities markets involve inherent risk and not all positions are suitable for each individual. Check with your licensed financial advisor or broker prior to taking any action.

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