Sunday, April 25, 2010

SPY Weekly- Doji did not confirm for bears

Last week we were seeing some uncertainty with a weekly doji, and were looking to see whether it would confirm with a weekly down bar. It did not.

Friday, April 16, 2010

They don't ring a bell at the top, folks...

...we need confirmation next week.

Thursday, April 15, 2010

SPY short: Worth the trade? UPDATE below

For intellectual pursuit, let's look at the Elliot Wave and Wolfe Wave hybrid set-up for an intraday short on SPY. We had a nice upward motive followed by the a-e "corrective" phase on Elliot wave. Bulls would say this is a bull flag, but this does show a moment of indecision in the trading, it could go either way.

If someone wanted to enter short, the down sloping white lines would be the targets, based on Wolfe Waves. But is this tradable? Odds are that this will end in misery for shorts, but heck, maybe the 37th time is the charm.


UPDATE 4-15 at 3:53 pm

Here's the result. Yes, shorts scalped a bit, but was it worth the trade? What's the target?

Tuesday, April 13, 2010

More bearish Wolfe Waves: XLF

See previous post for explanation.

Sell the Earnings News?

Bearish Wolfe Waves have not triggered very often for this latest uptrend since Feb 5th, but the set-up has reappeared yet again. On April 7th to 8th, the Bearish Wolfe triggered and got to the second target area for a small profit.

Now, on the 65-minute chart, we had an evening star doji Monday at 3pm and a bearish confirmation into the final hour. This is similar to any test of top with a blow off that comes back into the trend channel: the same idea as a Trader Vic2b. With this relentless low-volume rally, only the first or second target has been met on these small pullbacks. My "feeling", however, is that this bearish Wolfe can give us a deeper pullback this time... and Eric has sentiment pegged. Newsweek even gave us a beautiful cover!

Let's review: Fundamentals are fair value or slightly overpriced; Technicals call for a pullback (we are even at Wave 5 from teh Feb motive impulse); Sentiment is wild, bordering on ejaculatory.

I'll go short and take one-quarter profits at each of the specified four targets. The stop will start at 120.05 and be ratcheted down accordingly to protect profits. Stalking a top like this takes discipline and patience or you'll die the thousand cuts.... be faithful to the stops! My longs are still running, btw, with Teresa Lo's Dollar Core Portfolio fully funded and my IRA has the four Dogs of the the Dow.

Wednesday, April 7, 2010

SPY: Bearish Wolfe Wave

This is my most bearish scenario.

Friday, April 2, 2010

Update: Dogs of the Dow

Eight weeks ago I allocated my IRA into the four Dogs of Dow and so far, so good. February 5th was the swing low and my holdings have cumulatively appreciated 8.6%, although under-performing the SPY which has gained 10.6%. The best Dog gainer has been Dupont (DD) which is up 16%, and the worst of the four is Merck (MRK) with a 3% gain. Verizon (VZ) and Kraft (KFT) have intermediate gains. Only Verizon (VZ) has not gone ex-dividend since the purchase, and the cumulative yield of the Dogs is 4.5% annually.

I am pleased with the good performance of the Dogs so far; while they have not done as well as the SPY index, they should be a safe haven for my stock allocation for the remainder of the year.