Simplicity in TA

Quote from Xspurt:

... It won't take long for the daily cycle to bottom and the pressure turns up on the daily chart so if we are still clinging on to the resistance we can push up.

Still long and stops tightened.
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Quick Big Context review...

1) Before the high the expectation was for the Fed to pump the market to make a Major High on the top of the wedge and this happened.

2) This was expected be followed by the wedge break and the start of Wave 1 of the Crash and we got this drop

3) When Wave 1 was complete (marked by climatic shorts volume) my expectation was for an ABC reverse bull move within a bear context and this developed

4) We now have the ABC move well enough defined to be complete and IF it is complete I am looking to the downside to take over.

5) The bear move is complex compared to bull moves as it can take 14 different shapes, so now the trick is to trade into the right direction.

6) Although I mapped this out a year in advance and it is unfolding pretty much to plan, that doesn't make me vulnerable to my own expectations. We are in red how danger territory on the daily but we could pull back and gas up for a weekly push up that keeps the bull move running so I will look at how to trade this position as best I can.

Caveat: At any time I might disappear for a while as mum was in good health and went in for a minor operation which turned into a major op to remove cancer and it doesn't look good.

Recent Break

I was expecting the FTSE to lead the way on a break of the down trend line and lead the Dow up and we got that move. I warned that the Santa Claus rally often ran out of steam at this point and after a wide bar break the rally fizzled out. As you can see we are now back in resistance.
 

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The Dow was a bit of a laggard to the FTSE and really dithered on the down trend line but eventually follow its lead. To keep profits stops were tightened but long position held to capitalize on the break up.

As with the FTSE the Dow is on horizontal resistance. Volume shows this is a potent position. By that I mean when compared to prior attempts at this level there is a stronger attempt to push through to the high about 180 points up.
 

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The SPX is lagging the Dow and the FTSE and does not confirm the volume activity on the Dow. Hitting resistance with a Continuatioon-Reversal Signal gives us a good trade position. For anyone not familiar with a CR signal - it is a hold for longs if the high is taken out and a reverse short if the low is taken out on a closing basis.

While the FTSE is messy here on a daily basis, the SPX and especially the Dow are showing quality set ups. Quality is where the money is made.

I hope this helps some folks among the tens and tens of readers of this thread. I have noted that many traders here on ET have taken a pasting since the start of the year but this is relatively easy stuff. Soon, perhaps beginning here you will need to be sharp witted and trading nimble not to get whipsawed.

As I alluded to earlier, the weekly cycle is on the verge of kicking up and the smart money often shakes the tree before the move. Piling on the shorts if the signal is given can be a bear trap and while the pull back is profitable watch for a quality reversal set up.

The Mid East is heating up with Russia saying any attack on Iran is an attack on Moscow. It's gonna be great trading year with so many major events possibly whipping the markets into a frenzy.

Good trading :)
 

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So when you talk about the CR signal taking out a high/low... the high/low of what? Do you mean Friday's high/low?

I'm not putting money on any of this, just following along and trying to understand the thought process.

Just curious, what will you do if the market keeps going up? How would that effect your long term outlook? If you're expecting a crash now at Dow 12700, will you still be expecting one at Dow 13500 or Dow 15000?
 
Quote from dv4632:

So when you talk about the CR signal taking out a high/low... the high/low of what? Do you mean Friday's high/low?

I'm not putting money on any of this, just following along and trying to understand the thought process.

Just curious, what will you do if the market keeps going up? How would that effect your long term outlook? If you're expecting a crash now at Dow 12700, will you still be expecting one at Dow 13500 or Dow 15000?
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Yes, the last bar showing on the daily chart is the signal bar and today can be the trigger.

If the market keeps going up I keep long as I have been saying.

I wouldn't go so far as to say I am expecting a crash at 12700 in an election year when they manipulate the market to the limit of their ability - see earlier comments re. this. However this is a year when it is easy for events to take place that are beyond the control of the PPT.

My position is medium term long in a larger bear context. Elliot Wave allows for a new high and yet it can still be a bear context.

My Expectation was for an ABC weekly up wave such as we are in now and going close to the rising wedge or even penetrating it is common. You can't tell in advance if you will get a 38.1 reversal or a 61.8 or greater, you just trade what you see and I have been demonstrating how to do that.

So there isn't a simple answer to your question other than this: look at the monthly, weekly and daily charts to see where the maturity and best signals are. When the bigger charts show a reversal and the daily is taking out lower supports then it is easier to project the down move.

Take the top for example: I had mapped it out months in advance but until the wedge was broken I couldn't be sure that was the major top. My expectation was that it had signaled top and PA would confirm. When I was looking for the bottom, until highs were taken out I couldn't be absolutely sure that was it.

As I wrote, I think this will be a real complex challenge to trade from now on and I expect fakes, shakes, whipsaws and big set ups. As these develop the picture clarifies for the next round.

So medium term it is ABC and reverse down, and I want to examine this position for C completion. However I see the weekly can take off on another cycle up and with the daily bang on resistance with a daily signal that can either give us...

1) the next leg down or
2) set up a regas for the weekly up(Down for Up)

If the signal is a continuation then there is no change as stops are not hit so longs remain in control. It would be easier if we go up now and get rid of the gas in the weekly charts. Then I would be more adamant about the potential for a crash wave.
 
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