Market Report: What an Awesome Week!!
Well it was if you traded the set ups that we traded, if you are still watching that paint dry on equity markets, you might waiting a little while longer.
The markets are starting to wake up, although you would not have noticed that on stocks, once again the US session is pretty much stuck in a coma as the market fights it out.
However for the traders that were prepared to go looking for ideas, other markets presented some great ideas, and once again we nailed some great ideas.
The European Zone has been the subject of news for weeks on end, but it got a little too bearish last week as it seemed virtually everyone was short the EUR/USD pair.
This week saw some great movement in this cross, virtual text book Elliott Wave trading, I really wish all weeks were this easy.
Early in the week, I pointed out to members that with a 5 wave decline, setting up a bounce should be seen and one that could be seeing a 200 pip rally, selling the lows at any time is a non starter, as the risk after a 5 wave decline is to see a correction and one that if you get the timing wrong could do some damage.
Well the bears that were a little late to the party found out the hard way not to sell a low especially after a 5 wave text book Elliott Wave decline.
I penciled the 12850-129 as a target band but the min I wanted to see was the previous 4th wave at 12815. I felt the min it should see was that area.
Over the coming days, we witnessed some great text book waves, and a great example of having that little edge with patterns going a long way.
With 5 waves down seeing a 3 wave bounce, was the trade going into the middle part of the week, although we was really looking for the end of the correction to once again jump back on the short side.
So with the min met and ending a 3 wave rally with an Ending Diagonal terminal pattern, it was once again time to get back on the short side, for the new move lower.
Although towards the lows again, the market looked like it wanted to setup a trap for a [b] wave low. Thus expand the correction and see a trip back above the 12815 high, like the Ending Diagonal that ended into 12815, this one was setting up at the lows, so again, it gave us a virtually low risk setup to buy the lows for a move back to 12815 and complete a larger correction.
So with an expected move to above the last swing high, we once again was looking to sell the rally as it finished what we Elliotticians call an "Expanded Flat".
With a target penciled back to 12850-129 the high came perfectly in our target range and thus another great opportunity set up itself to sell again, and complete the move.
In the matter of 3-4 days I think it provided some of the best text book Elliott Wave trading in the past 4 months, considering the actually complexity of the move, some great moves, and some perfect text book Elliott Wave trading, for those that doubt its usefulness.
This was done in real time alongside members in our chat room.
Pretty much a 500 pip move was had to those that stayed on top of the waves. It was a real pleasure to trade that pair this past week gone.
What's the wave count?
Why do you need to know what the macro wave count is? When all you need to watch for is a 5 wave move and a 3 wave correction, does it matter if this is going to 1.50 or 1.20?
3 wave corrections to sell in this sort of down trend is a bread butter trade, to those that can get on top of the moves.
Whilst most Elliotticians are pulling their hair out trying to decide "what's the count" we simply went back to basics and scaled down the time frame and found ideas that we understand.
I am simply not interested in the waves that have happened; I am interested in the potential wave that can happen, i.e. using Elliott Wave for its predictability.
The EUR/USD remains on a daily sell, but to the traders that find setups that offer low risk you can trade both sides of the tape.
Another market that we were watching was Brent; this had been setting up some sort of 4th wave
With the sideways characteristic of the tape, a triangle was suspected and a thrust higher out of the triangle for a 5th wave, well another Elliott Wave text book move, and once the thrust was completed a chance to sell the thrust and at least looking for a move to correct what we suspect was a 5 wave advance.
The potential for extended gains is very real under $112.25 as I am already seeing signs of Crude diverging against US stocks, so a real setup for far extended gains lower.
These are just 2 markets for traders that were prepared to actually put in the hard work to find setups and not watch paint dry as was the case on stock the past week just gone. Not to mention the Wheat trade or GBP/USD idea, or the other ideas that we found.
Once again taking the skill of Elliott Wave to other markets is what we do best, if we don't see anything that we like or understand we simply don't trade it, the past few weeks I have been advising members not to get involved with this chop in the stocks markets atm stuff unless they really want to.
Staying out to markets is just as important as being in the markets.
"No trade is a trade"
Why trade chop and get chopped to pieces when you can go looking for opportunities that just are begging to be traded.
If you don't have the time to find those chances ,that's where we come in, we go an find those trades, I personally don't post any charts or ideas to members unless I would trade them myself.
But unless you have access ot those chances and ideas you are missing out in a big way, if you don't have the time to find those chances find with someone that does have the time to find ideas, that's what we do best, find ideas for members to act upon.
We focus on risk management and also focus on ideas we understand, so we can control where the risk is involved and above all, we ask ourselves the questions?
Do we understand the idea and what are we risking and what's the reward?
I continue to believe that the NDX is the key to the US markets atm, the other markets are showing less than perfect ideas, and so as the NDX appears to the best of the worst atm, I am more focused on its structure.
Earlier in the week I presented a short term update, and the NDX continues to follow that script, although to be fair Friday was getting very close to confirming a breakdown in the markets, and almost had me confirm a reversal, but the bulls stopped the decline enough on the markets to against suggest a trip back to the highs once more.
An open target I have been eyeing up has been 2400 and I still think that is potentially possibly although I am just looking for any new high and a solid reversal, we have put in some heavy looking daily candles recently.
One market I have been watching has been the RUT and it too eventually hit its long awaited target of taking out the Oct 2011 highs, 772 is a huge area on the daily time frame, its big resistance, with a virtually completed count in most markets, I am actively looking for signs of a reversal now at these levels.
The big move seen in oil this past week is potentially a warning sign for the markets.
With the way US and European stock markets are setting up, a subtle yet important clue could be from the divergence in oil.
I think that chart could be telling us an important edge and one I am closely watching into next week.
We finally got that new high I was expected as this has thrusted out of the triangle, although when you scale down the short term time frames, it potentially still could reached my $430 target, earnings are expected to come out around the 24th of Jan, so could still see a push to that $430 target and lift the NDX to the 2400 target and fill some open gaps on the NDX.
US & European markets did pretty much what they did the week before, and unless you must trade imo the equity markets are best avoided whilst they still chop around like this. We have some working ideas on both the US and European markets next week, but I do like the NDX as a marker to use for the US markets in general.
This weekend alone I have posted nearly 30 charts and ideas for members, and as the market starts to wake up, I am sure they will be no shortage of ideas.
This is just a small selection of this weekend's analysis.
Members know what we are looking for and whilst the markets chop around like this, sitting flat for most traders is probably the best option imo.
So whist the lows hold on Friday I am expecting price to push higher, some ideas on the FTSE and DAX still have some outstanding targets, so as the markets are closed for MLK day, European markets will need to lead the charge higher to reach their targets.
Until next time.
Have a profitable week ahead.