Tuesday 13 March 2012

To The Galaxy Far Far Away?

Do not front run and, do not short this market based on your bias.  These have been my everyday mantra for my readers.  Those who shorted the market based on various TA and / or Elliot Wave, have had their heads chopped off today and handed back on a silver platter.

Well, I am market neutral and sitting on the sideline for quite a while because I am not sure about the trend. The risk reward calculation does not allow me to go long but I am not short either.  How much loss of capital that gentleman at E Wave has caused to his readers? I understand that he has been calling to short the market with all the leverages for the 2nd time in this quarter.  Anyone who has acted based on his recommendation would have been wiped off by now. Same thing goes for ZH. At least ZH is a source of some useful information but Elliot Wave theory has to be the most practiced con game in town. I am yet to come across any one calling the market correctly based on Elliot Wave. And they are all wise after the events. Yet people are ready to pay hundreds of dollars to read their newsletters! Snake oil salesmen really do well even in this day and age.

Now that I have ranted and got my pet peeves out, let us see what the market is doing.  Essentially, it is doing what it does best. Hurt maximum number of people.  The rump job which came out of the blue in the last one hour was a JPM baby.  The boyz have now killed the entire short and will bring in the last few investors sitting on the sideline. But this is Triple Witching week and do not take anything at face value. Most likely all the gains of today will be given back very soon and some more but again that is not an invitation to short, rather a reminder to play it safe. This is not the last opportunity and those who are patient, will be rewarded suitably.

While I am sure that any major sell off in equities are still far off, I am not convinced about the “Risk On” trade.  Look at the precious metal sector. Gold again lost the 200DMA. Look at EURO, struggling below 1.31, AUD below 1.50. The correlation between the FX and equities has been broken and only equities are surging ahead.
Not very convincing and looks like a trap.

Do we go all in now? Not me, not here. Here is a table from Stocktradersalmanac.

Historically DOW has been up 19 of the 29 March Triple Witching. So we can expect this year up as well given all the liquidity sloshing around. What is interesting, what happens after? My cycles are calling for small weakness in the last week of March followed by another upswing. So depending on how much weakness we see in March end, I might go long for a very short time. Remember March comes roaring like a lion, goes out like a lamb. Not a done deal but odds are high.

Technically speaking, all the oversold conditions have now been corrected.

NYMO is in positive territory. So it can sustain any sell off in the last two weeks of March if it comes.

The trend table continues its long signal for indices and short for PM.

Once again, stay nimble, trade safe and do not front run based on your bias or after reading how the world is going to end soon.

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  1. u r absolutely right about elliot waves.....i actually started with elliot waves...but luckily i understood that its bullshit....was Mr Elliot a freemason...????? most likely he was....deception everywhere......

    i believe SnP is going a lot higher and so one can hold on to a little long position even if not very sure about the trend......But I think Indias Nifty is following a script ....


  2. Staying long EDC, TQQQ until at least 119 and 115 respectively. Will sell FSLR, TSL around 30 and 8 respectively. This is Wave 5 of 3 of big bull. Should take us up to 1440 on the ES. Air pocket. Inter market relationships change, but charts don't lie.

  3. At what levels would you start going long GLD? Thanks!

    1. Entry will be a factor of time and price. End of March - Mid-April and around $ 1500-1550 would be good entry point. But I will call out when I go long gold.