Ewj: elliott wave

This time may be a Bear Trap.

 

13 waves up (=5), 11 wave down (=3). Prepare to open short "Short position" at measured move, but keep the long position until stop out.

 

SPX could find some support at the 10 and 40 day MA's which happen to be both coming thru, coincidentally in the 1472 handle:

1472.52 = 10 day MA

1472.93 = 40 day MA

The market broke down slightly below the 21 day MA at 1478.79

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The 38.2% retracement of the recent move up off of the 1435.65 low on
12/18 is at:

1474.71 SPX

1467.25 SPX = 50%

1459.42 SPX = 61.8%

 

Bullish Scenario 1.
Minor 4)c ended as a Triangle. Intermediate 5) rides on the January Effect to new all time high. This is the sixth month of correction, long enough for an Intermediate wave 4).
Strategy 1.
Elliott Wave Minor Wave Trader should buy a lot of call option here.

Sideways scenario 2.
Minor 4)d is carrying the Market to new all time high as a Bull Trap, the Minor 4)d brings the Market down to below August low.
Strategy 2.
Buy call here. Close the call and buy put at all time high. Close the put below August or November low.

 

Bearish Scenario 3.
The counter trend swings are smaller and smaller. They were 70,7,14 points for the last two weeks, making it difficult to trade counter trend. Last month they were 100, 10, 20. The month before they were 200, 20, 40 and before that 300, 30, 60.
Looks like a tree swing. Now it is waiting to be push again. UP or Down?
Look at the 200 dSMA and see a proof that the stock market exhibits a mean reversion.
The Market should go down as 4)c.3 before the end of the triangle, else it is not a triangle.
Scenario 3.
Buy put at Bhutto's news.

 

Status.
Long position closed at the fifth wave of c failure. Short "Short position" reopened. Next measured move may be
4)c.2:cã=13562.9902, 1498.85, 2727.55
4)c.2:dá=13380.7402, 1479.99, 2688.4199
4)c.2:dâ=13428.21, 1485.5, 2701.6001
4)c.2:dã=13245.96, 1466.64, 2662.47
which is near Landis' 50% retracement. Head and Shoulders pattern may end near here too.
From here the Market can rebound to new all time high or as wave 4)c.2:e then fall as 4)c.3 to below August low.
Strategy.
Close short position when there is a higher high near target and enter long position.

Note: Wave e in the Bull count can be shorter than expected.

 

Short position closed at open and long position opened. Set stop at the last low.

 

Position reversed after open when there was a lower low.
Prepare to reverse position again. 60, 6, 3 points to target.

 

Position reversed at double bottom. Set stop at the last low.

 

...1...2.... so far....
Quote from elovemer:
...looks like another 5 waves down .... after the 3 waves up ... on the daily ....
.... is still possible......