Relentless

By: Nouf | Mon, Jan 17, 2011
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That's a good word to describe the current advance; I have read so many articles about why the market "must go down" or why it's due to reverse.

Granted, under normal market conditions, the laws and market forces generally would suggest a reversal, however with POMO and the FED literally handing out free candy, is it any wonder that the US markets have not reversed.

I think too many traders are trying to look into the market in a systematic way, and ignoring the obvious trend.

The obvious part of this move is there are simply no sellers, well nothing to cause the dramatic reversal that everyone seems to be looking for.

Now don't get me wrong, we at wavepatterntraders.com had a 1250 SPX target from way back when the SPX was trading at the 1180SPX area, although this has gone a little higher than we anticipated, members have not been throwing themselves in front of a freight train trying to pick a top.

The easiest and quickest way to lose $$$ is to fight a trend, yet to this day, so many traders attempt to pick one; thinking "this is it" it's the top of whatever Bearish count the Bears are calling it these days.

An easier way to make $$$ is to actually find out who is buying and who is selling.

How can you do this?

Simple, listen to what comes out of the S&P pits, that's what members of WPT get to find out.*

With us knowing that the likes of Goldman and JPM are and have been consistent buyers from our support areas, it seems crazy to want to fight them. So knowing that is what is happening, we just keep buying the dips, as the dips are within 10 handles and using our maps and watching price action, we continually stay on the right side of this trend, not trying to be a hero and fight it.

We have been using a simple technique of the 10 handle rule (corrections stick within that boundary in a Bullish trend).

The next best thing you can do if you still are Bearish, is to actually wait, yes wait.

Why traders keep trying to pick a top is beyond my comprehension, as you don't have any risk point.

If traders want to sell the US markets, at least wait for it to actually reverse and go down and sell on a bounce into resistance. You will have plenty of time to sell these markets, but until that happens, why not follow the trend??

Besides we will get to find out if there is serious selling taking place, via what happens in the S&P pits, so members will be alerted to this information.

Or you can simply move to other markets, that present themselves with other opportunities like gold and silver, or maybe the FX markets like EUR/USD, GBP/USD, and AUD/USD etc

At WPT we don't just do analysis of the US markets we cover a lot of other markets, if it moves we trade it, if it's got a clear pattern, we trade it.


ES

Currently we are working a 5 wave structure from the late Nov 2010 lows, and suspect that we are now within a reversal slot, although the initial target was 1250SPX, we later revised that to 1296SPX (remember to allow for the spread between the futures Vs cash price).

Ideally we need a small down/up to finish the pattern, although there is enough gyrations to allow for a reversal from these levels, so we are fully aware of the potential now, and are actively looking for that reversal, although we have some key supports that will need to be broken 1st and we also need to know that there is hard selling via the S&P pits, and lastly we will need to see a breakdown in price character and more that 10 handles to break the 10 handle rule.

* I have permission to post occasional comments in the chat room in written text form. I have been a subscriber of Tradersaudio.com for a long time and won't trade the ES now without it. It has provided a massive edge for me over the years and is, in the author's opinion, an extremely valuable tool for the full time or active ES futures trader.

So some exciting times arriving shortly for the US markets, and if our counts are correct, then we should be on the verge of a decent reversal.


Larger Image

The internals are clearly lacking on the current advance as seen on the NYSE McClellan Osc and it has a very similar signature to that of the April 2010 peak, clearly diverging against price, although price can and does move in a direction that sometimes far exceeds what most traders think, it's clear that there is less and less participation these days, just as there was into the April 2010 highs.

With the lower lows and lower highs, it's becoming obvious that this is not seeing the kind of support that a healthy trend should see, and the internals do match up with a potential reversal here, although to date we don't have any evidence yet.


NQ

This supports a great looking count, and one that we suspect is the leader, and has been for a while; we can clearly see what appears to be a triangle, so based on that interpretation, we suspect this we are in a triangle termination thrust.

In order to create or begin to consider something extremely Bullish, I would like to see a change in the internals and buyers really step it up here, failure to see that has me very cautious about expecting much more upside, and I probably suggest actively looking for clues on a reversal, although we do have some edges we can confirm any such reversal, rather that picking any old area and hoping for the best, which is something that we don't do at wavepatterntraders.com.


Larger Image


SPX vs USD/CAD

I have showed this chart before and continue to think that it offers one of the best kept secrets to what happens to the US markets, as you can clearly see it trades inversely to the SPX and has been a massive edge to members and using this pair for an edge is what has kept us out of trouble.

Don't take my word for it, pull up both pair and track them you will see the very tight correlation and this pair has played a vital role in my work over the past 3 years.

We are working an idea that is very close to hopefully confirming on the USD/CAD, and one that should be a setup that members are gearing up for, as if we are correct about the idea, it should have some serious consequences on the US markets.


DOW (11750)


Larger Image

Ding ding, we finally arrived at my much awaited target, with a short term Elliott Wave count, we are on Defcon 1 and now looking for a reversal as we have many pieces of the puzzle now in place.

Going into the next few weeks we suspect to see some great moves and we intend to take advantage of as many as we can find, in both the US markets and FX markets.

Give yourselves an edge and look at many other opportunities that are out there, as the FX markets offer a number of consistent setups that many traders are failing to take advantage of.

You don't need those super cycle Elliott Wave counts to take advantage, using 15min and 60 min charts, will suffice to most traders needs.

Until next time.
Have a profitable week ahead.

 


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Nouf

Author: Nouf

Nouf
www.Wavepatterntraders.com

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