Markets In Transition..Continues – Part III

FATCAT_WALLSTI’m not sure what the BofA analyst is saying regarding China’s FX reserve numbers.  They reported a drop of $99.5 billion and that ‘kicked the can’ down the road for the US dollar for the time being.   There was a major shift of capital back into treasuries and out of equities and some commodities.  However, it would appear that while the Chinese Central Bank is attempting to pass the hot potato back to the dollar by defending the Yuan.  At the same time though with so many moving parts it is difficult to tell how severe the burns are.  The chain from the Yuan to the U.S. dollar and back can get tossed between several markets and sectors before it ends up back at the central banks.

2030capitalaztionchartglobalWithout a doubt, we are seeing some very high stakes being played out on an international monetary scale.  It would seem that to shift out of U.S. dollar positions has taken precedence and is more important than extending the stability of the global economy’s leader or number two is bound and determined to push itself into the number one position.   How that then transcends from one market to the next should always lead back to the currencies of the two major players, the U.S. and China.  At the moment, the pecking order remains fairly in line with the chart from last week, although I would lean more towards the top three being the U.S., China, and the EU.

Back to the markets responses to the China FX reserve number. While we wait for the interested parties to figure out how to prop up their economies without upsetting the proverbial “apple cart” there are more opportunities to trade than this mere human can keep track of — it has become essential to have a solid ‘auto-trader’ that performs for the better part – flawlessly.  Without it, I remain committed to the discussion of trading without emotions and operating with a tested and trusted signal generator. And without a less than expected number from China, the equity markets, of course, continued on their current trajectory with sudden and in some cases “Sid Vicious” turns.  It remains to be seen as to whether China will be able to reel in the mass exodus of reserve currencies.  At the moment the harder they attempt to prop up the yuan through the front door, by selling U.S. dollar reserves that are leaving out the back door and being moved back into the U.S. markets hand over fist!  The illusion remains that the U.S. has the best promise of a return.  The game remains afoot.

Check out the charts on the $ES for trades and discussion.

2016-02-08_15-49-38S&P_630_730

2016-02-08_18-40-34_S&P830_1250

 

 

Markets in Transition – Crude Oil

As I began my last post I continue to understand the trading mantra, “I don’t care.”  I do care as to whether the shift in trend is towards buying or selling, but I don’t care about the why or what or where.  This, for the most part, allows me to concentrate on the momentum. The strength of the momentum determines the trend, whether that be on an hourly basis or a tick basis.  When you consider momentum on an hourly or daily basis it becomes more attached to a “binary event.”

Binary Events come in various sizes with regard to “strength” and “intensity”.  Tsunami’s are predicted according to the strength and intensity of an earthquake.  The stronger the quake the greater probability for a larger,  more intense tsunami in the form of a massive wall of water carrying literally tons of momentum.  As it rolls over land it obliterates everything in its path.  Weekly reports on crude can and often do provide many opportunities to trade once the violent knee jerk motion subsides and I would not consider some of them to be major in strength or intensity.  However, the further the “quake” goes up the chain towards reaching – foreign currency reserves – namely the U.S. dollar the resulting tsunami will roll across many commodities and sectors.

binaryeventHere’s the caveat, the canary in the coal mine, the domino that kicks off the race to the exits in all it’s forms, being either from the long side or short side.  China is expected to report that its total FX reserves declined $3.2125 trillion from $3.3 trillion.  A drop of approximately $118 billion.  Which the world needs to see in order to keep the “status quo” or a continuance of the quietly higher massive December 2015 outflow of $108 billion.

So, a reported number that would be below $118 billion or substantially below for January 2016 outflows would kickstart in mass  a short squeeze across the board in most commodity and materials linked sectors.

Here’s what BofA strategist Claudio Piron is expecting – a far smaller outflow.

“We forecast China FX reserve changes and estimate a USD37.5bn fall in January – (USD29.1bn decline adjusting for a negative FX valuation effect). Note that the standard error of the forecast is large at USD24.5bn, which would give us a downside of USD84.5bn fall. We caution that this is guidance and we attempt to be as transparent as possible so investors can gauge the odds in what is a key release for the markets. Note too this is based on onshore CNY FX volumes and our estimate maybe biased down as there are no real time volumes for offshore CNH.”

 

Futures Traders Should Participate Not Anticipate– the current volatility should remain high in that the markets may be bracing or be subject to a larger “trend change” from short to long – ala a massive short squeeze.  Should that be the case – do your best not to trade with emotions and let your signal generator do its work.  A larger “player” short squeeze should switch the “runners” to the upside.  Protect yourself against the urge to succumb to “counter trend” trading.  You don’t want to be missing out on all the fun so participate instead of attempting to anticipate the next turn in the other direction.  Which, by the way, is likely to be much shallower than you think because those needing to cover shorts will create an avalanche of demand as the various derivative traders get involved.  It will be best to keep focused on the trading mantra –  “I don’t care” about the “who, what, when, or wheres.”

Check out the chart below for a snippet of Friday’s trade in Crude – “CL”  I trade using a tick chart and with prices moving all over the map to squeeze together the day would be to miss the trees in favor of the forest.  The chart included is the time I traded, which is 6 to 8 AM PST.  The balance of Friday’s session reflected a quickly changing market as it appeared several larger traders were “somewhat” squaring positions or just plain out taking sides.

2016-02-06_17-22-53_CRUDE

The gross ticks from the indicator “signal to signal” performance was +123 ticks.  Net numbers depend on your commission rate and “slippage.”  Deducting 25 ticks as “cost” would put the net ticks at +98 ticks or $980 per contract trading the front month – in two hours.

Sunday brings the perfect front for US retail traders – The 50th Super Bowl.  China will report their FX reserve numbers during the game — Globex opens at 6 PM EST – 3 PM PST – Do you know where your position is?

 

 

 

 

 

Markets In Transition – Economies Too?

financial money economyI fully understand today’s trading mantra of ” I don’t care!”  It makes total sense if you are just trading the number according to what your signal generator is telling you.  However, it can become a nagging problem when the trader in you surfaces and begins to haunt the thought process by questioning the “Who, What, When, and Why family.”  In case, you don’t recall them they usually show up along with their cousins, the twins “Doubt and Fear.”  They often invite themselves in for a “quick” cup of coffee and stay for the day and eat you out of your emotional house and home.  There are many days when being a “gnat on the elephant’s ass” is more difficult than imagined.

2030capitalaztionchartglobalWhen markets are in transition it produces incredible opportunity at the speed of light as thousands of orders race across networks pushing prices in all directions often simultaneously.  Check out the 2030 forecasted capitalization of global equity markets.  The nominal value in US dollars is 284.2 trillion.  According to the Federal Reserve, as of 2015, there are $1.39 trillion in circulation, of which $1.34 trillion are in Federal Reserve Notes.  Doesn’t take a rocket scientist to do the math. I’m not sure how much longer the system can rob Peter to pay Paul when they are both within the top 1/10th of 1%.  With the US and China dominating the world economic stage at the moment it is not a surprise that any international hiccups coming from either country carry the potential to create a global tsunami with an urgency to exchange capital.

When the U.S. dollar makes a substantial move in either direction it forces massive readjustments across the board.  Remember at the top of the “food chain” sits interest rates which are tied directly to the flow of dollars in and out of the various markets.  The U.S. dollar remains the dominant international currency  for trade but the brewing battle amongst the top tier isn’t over, leaving the “pissing contest” between the uber rich in place.

Interesting thought – the list of missing Chinese billionaires continues to grow.  As of the end of 2015, there were 36 missing Chinese executives.  That and a softening economy moving towards experiencing  a good old fashion western economic recession has triggered a recent string of landslides (down 7% within the first 30 minutes of trade) on the Shanghai exchange.  Makes you wonder if the same thing happened to a string of TBTF exec’s on Wall Street would the reaction be one of bewilderment, confusion, and potential panic or one of extreme relief!

Wednesday was the type of volatile trading day that many day traders live for.  Successfully trading it though takes the ability to move very quickly in and out without much regard for anything else but how many ticks you are tossing into your pile versus someone else’s pile.  So here is hopefully the best advice I can give you in developing the skills to step in and trade volatile and incredibly quick price swings.  buybuybuysellsellsell

“Learn to trade without emotions.” 

This is honestly easier said than done.  Ridding oneself of any number of old and no longer useful habits, i.e. the family members I mentioned above, is a process that can be confusing and incredibly frustrating.  But one that commitment to, is essential towards succeeding in rejecting the old habit in favor of embracing the new change.  Often, I have found that the new change can be taking two steps back in order to reset your thinking, and then make the necessary changes to an “old” habit by retooling it to fit your current situation.

Remember the key is being able to reduce and separate the “noise” from “opportunity”. This takes knowing and executing a well-defined strategy which allows you to see opportunities amongst the “chaos.” By trusting the mechanics of your strategy, you will be able to take advantage of them. 

Opportunity continues to knock on our doors.  While it doesn’t come without risk, risk can be defined and more manageable. Volatility and broad moves are exactly what a day trader desires and being able to respond without questioning is a luxury many are unaware of. 

Check out tomorrow’s post for charts of the $CL and $YM with trades and discussion.

Has the Bubble Burst?

steerclearsignalsIt is not uncommon to move past a “bubble” bursting and not realizing it.  Denial plays a big part in the recognition of such a phenomena.  While I admit the speculation can grow extremely strong as pundits try to claim their 15 minutes of fame by making bold statements of impending doom only to get caught up in the hype itself.  It is unfortunate that for the most part a bursting bubble is basically only recognizable in hindsight.  Until then we witness what has become known as the Wile E. coyote period. Fans of the Roadrunner cartoons should get this picture – Wile E. Coyote running off a cliff, legs still moving forward with nothing underneath them and then that look of “oh crap” as gravity takes over.

I remember the “dot-com” implosion.  While the top occurred in March of 2000 there were huge swings to the upside as traders failed to see the “writing on the wall.”  The downside though was persistent.  Scattered and appearing small at first, it then avalanched until the end of 2002.  As a resident of the San Francisco Bay Area the layoffs were also scattered and small at first but when all was said and done the slide wiped more than 250,000 jobs from the local economy.  Local residents, though, either denied it was happening or were totally oblivious to it – at least for the balance of 2000.  The local economies were flush with cash bad business plans found funding, office space was quickly leased at any price and real estate listings drew massive crowds willing to bid well over the asking price.  Office parties were all the rage often resembling a grand New Year’s Eve celebration.

wile_e_coyote_2Sound familiar?  Could the next Wile E. Coyote moment be at hand – that moment when you suddenly realize that gravity is about the takeover and hurtle you back to earth.  Let’s take a look at several reasons the tech sector should be concerned:

  1. Does the market/investor still like your app?  Outside of the markets getting slam dunked to begin 2016 tech startups found it difficult in 2015 to raise capital.  Only 23 actually made it staging initial public offerings according to Renaissance Capital.  The total net cash raised was a paltry $4.2 billion  compared to $32.3 billion raised in 2014.  Many companies expected to launch via an IPO didn’t.  Dropbox, the cloud storage firm was highly anticipated to go public but chose to hold off.  Companies that did manage did not receive a ticker tape parade.  Square, headed by Jack Dorsey in his dual role CEO of both Square and Twitter was forced to price Square’s IPO at $9, which was well below the expected range of $11 to $13.  Fitbit priced its June IPO at $20 quickly catching an updraft to reach $50 by August with gravity taking over and the stock reaching a low of $15.52 last week.  ETSY Inc. the online marketplace for all things handmade debuted above $35 in April 2015 and reached a low at $6 last week.  Newcomers were not the only companies to suffer the wrath of gravity take a look at Yahoo and Twitter both of which continue to slowly drop off into the sunset.
  2. Shrinking Valuations – While venture capitalists remain willing to dump additional cash into the constant flow of new and must have apps the latest funding rounds are cutting the value of many startups by more than 50%.  This is a clear sign that investors are no longer comfortable with high(er) valuations for many tech firms, particularly private held startups currently carrying a $1 billion-plus valuation.  Take Dropbox and Snapchat for example – both firms saw mutual funds scale back estimated of how much the firms were worth.
  3. Layoffs – while not making the headlines several tech firms are cutting staff.  Yahoo is expected to cut its staff by 10% which may include its CEO.  GoPro announced in January plans to cut 7% of its workforce.  Last year saw eBay, Groupon, Intel, Twitter and Zynga all downsize its workforce.  Then there were the companies that didn’t survive, Homejoy, Plug.dj, PachIt, Rdio and Sidecar have all closed up shop.
  4. Sublease and Party like it’s 1999 – it would appear that nobody has taken note of Twitter’s desire to sublease part of its San Francisco headquarters.  Even with the huge tax break given by the city of San Francisco, it appears that Twitter just doesn’t need all that space and with rents averaging over $72 a sq/ft, Twitter stands a good chance of making a tidy profit over when combined with the huge tax breaks granted by SF.  Holiday parties, though, were once again “over the top” for 2015.  Twitter, for example, took over AT&T Park to host its employ holiday party.  Yahoo and Facebook though took the top honors for theme parties seemingly based on the “Roaring Twenties.”  And for those wondering the 1920’s were the decadent decade the proceeded the crash of 1929 and the Great Depression.

deceptionThe signs are out there.  Whether or not they will get noticed or picked up is something yet to be seen.  The huge influx of capital seems to be still in place as millennials continue to believe it’s all just getting started and any downside is a “buying” opportunity.  So how do you better prepare yourself.  One method would be to keep a closer look at what company “insiders” are doing and where institutional money is being placed.  As earnings season begins to unfold many firms will be moving capital around as well as many insiders take profits.

Next up – I’ll take a look at the some of the high flyers and tech titans to get a gauge on what is happening.  In advance of that check out the data provided by Sage Data Service, for the latest SEC filings.

Sage Data Service was founded on the concept of making financial data more available, more transparent and more affordable. Our objective is to leverage XBRL and our proprietary technology to deliver the most accurate data to our customers at affordable prices. Every piece of data presented is reviewed by an analyst based in the United States according to strictly defined processes to ensure that our data sets the standard for accuracy. Our Research Platform provides professional-grade tools to retail investors, while our Data Feeds deliver timely information to our customers. We seek to fill the needs of all customers including active traders, market analysts, fund managers, corporate competitive intelligence analysts, broker-dealers, online trading platforms, investment thought leaders and academic institutions at the most affordable price point on the market.

NASDAQ – 100 Pushes Above 4400 Are We There Yet? – Part II Thursday’s Chart – $NDX

priceline-logo-223x58Thanks to Priceline’s earnings announcement basically being interpreted as “blowing the doors off” the price of the stock jumped by $100, which equates to about 9%. Now that may not seem like much since PCLN was trading at 1122 just prior to the announcement, but in my humble opinion it was further evidence of the extreme overvaluation that is taking place as the markets race to their penultimate peaks.

qqqThe NDX initially popped over 4400 on the news and retraced back to 4385 prior to the U.S. open. Once, the boost in the IBB (NASDAQ Bio-Pharmaceutical Index), plus a good goosing by FB, TWTR, and TSLA the NDX ran back above 4400 and elected to remain above for the balance of the session. Once again, though volumes were on the low side for an index making additional new 15-year highs.

Where is the NDX within the long-term wave count? I have updated the monthly chart that I first published on November 4, 2014. Since then the NDX continues to advance within the context of wave 5 of C of B. I’ve included more on that below. First though, I would like to discuss the “idealized corrective wave” from the Elliott Wave Principle by Frost and Prechter.

Idealized Corrective Wave

TOP – (Beginning of Wave A):

  • Large degrees: prosperity and peace appear guaranteed forever. Arrogant complacency reigns.
  • Intermediate degrees: economic improvement, good feeling.
  • Minor degrees: often accompanied by “good news”
  1. Wave A: Technical Breakdown, trend lines broken, viewed as buying opportunity
  2. Wave B: Narrow, emotional advance– technically weak, selective, results in non-confirmations. Fundamentals weaken subtly. Aggressive euphoria and denial.
  3. Wave C: Worst of Bear Market – Strength, breadth, prices decline relentlessly. Fundamentals ultimately collapse in response.

2015-02-19-TOS_CHARTS_NDX_Elliott

The following was first presented on November 4, 2014 and updated on February 19, 2015.

The NDX has been in the process of tracing out a Super Cycle B wave off of the 2001 lows, a move that has been 13 years in the making. Thus far Cycle Waves A and B are complete with Cycle wave C underway off of the 2008 lows. Within wave C it appears that waves 1-4 (out of 5) are complete. The most common relationships between waves 1 and 5 within a 5-wave sequence are: wave 5 = wave 1, wave 5 = .618 (wave 1), and wave 5 = 1.618(wave 1).

Here are the numbers:

  • Wave 1 of C = 1040.56 points 
  • .618% of wave 1 = 643 points  
  • 1.618% of wave 1 = 1683.63 points

We now can put some parameters around the potential finishing points for the current advance in the NASDAQ 100. Wave 5 of C would be equal in length to wave 1 of C at 4740.80. Wave 5 of C would equal .618(wave 1) at 4343.25, which has been exceeded. Wave 5 of C would equal 1.618 (wave 1) at 5383.85.

The NDX has again pushed to new highs for the current rally reaching 4412 on February 19th. That equates to approximately 80% of the expected move based on the calculations shown above.

bubblebursting

The San Francisco Bubble Indicator (reprinted from November 4, 2014)

I came across an interesting report first published on www.zerohedge.com, which caught my attention. Mostly because I live in San Francisco and have witnessed first hand the incredible parabolic rise in real estate prices as well as rents. The Case-Shiller report tracks the year over year price increase of San Francisco real estate. The headline “This Has Never Happened Before Without A Massive Bubble Bursting” demands attention the following chart is a wake up call for all of us.

San Fran Oct Case Shiller_0

In June of 2014 the Case-Shiller index had crested at 25% and was headed lower dropping to 19%. The above chart shows the Case-Shiller index dropping more precipitously with the annual price increase in San Francisco putting double-digit percent appreciation territory in the rear-view mirror, and has slide back into the single digits, or 9% year over year. At the current rate with all else equal, San Francisco home prices will move back into negative territory in another 5-6 months and when taken in context would only be the fourth time they have done so in the past twenty years. Check out the chart again – there has never been a time when the all important leading indicator, which is the San Francisco housing market, has posted such a steep slowdown in annual price increases without a bubble of some sort bursting.

What makes San Francisco’s housing market so important? It’s location. San Francisco has benefited strongly from the general Fed-driven liquidity bubble, but also from its proximity to both Silicon Valley and China, so it also benefits from two other liquidity bubbles – that of cash rich technology and the Chinese $25 trillion financial debt beast. Since the local housing market began to crumble in China, the local oligarchs have little choice but to put massive amounts of cash abroad and what better city to benefit from that inflow of capital but San Francisco.

So has the global central bank coordinated credit bubble burst? Taking a look at the equity markets and the San Francisco housing market, almost but not yet. But it appears that the wealthiest home buyers, a reliable leading indicator of easy financial conditions, are quietly sticking for sale signs on their mansions and opting to “downsize”.

The Case-Shiller index suggests a window of approximately 5 to 6 months before that index drops into negative territory, which in the past was accompanied by a bubble bursting. That would suggest March to April 2015 as being the most likely window for an equity market top. Interest rates are currently being projecting a hike from March to June 2015. I suspect the NASDAQ 100 will complete Super Cycle Wave B sometime within the first to second quarter of 2015 as the next bubble bursts.

keyinsandRemember the key is being able to reduce and separate the “noise” from opportunity. This takes knowing and executing a well-defined strategy and allows you to see opportunities amongst the “chaos” and by trusting the mechanics of your strategy, be able to take advantage of them.

Opportunity continues to knock on our doors. While it doesn’t come without risk, risk can be defined and more manageable. Volatility and broad moves are exactly what a day trader desires and being able to respond without questioning is a luxury many are unaware of.

trading_pit_OptionsThe Logical Signals Trade Room is up and running. We have an outstanding group of members that have already begun contributing across the board from trading indicators, patterns and products, to computer software and hardware.

Thus we are ready to move on to phase two of membership/subscriptions. Now that a core group has been established we have a few additional spots for other traders that may have an interest. Phase two, though will be somewhat more involved in that prospective members will get a chance to talk in more detail on their trading goals, experiences and expectations with me and possibly other members before deciding to join. At this early stage it is important to continue to steer the room in a direction that favors all of the members. Should you have an interest please contact me at Michael@logicalsignals.com

Steer the course and don’t compare yourself to everyone else. You are not they and they are not you. Remember to trust and believe what makes you unique at this moment in time and in this situation and allow others to choose for themselves. Don’t be swallowed up by the chaos and false emotions swirling around. Remember it’s just a number.

New Highs Arrive – Where is all the Fanfare? Wednesday’s Chart – Updated Elliott Wave Count -Monthly $DJIA

bull-market-teshia-artDid I miss something? I don’t remember hearing any shouts of joy or any applause when the S&P moved to new all times. Nor did I hear any shouts or applause when the NASDAQ-100 pushed to new 15 year highs or when the Russell 2000 finally and I mean finally moved up to a new all time high after languishing in the doldrums as the balance of the broader indexes pushed higher. I wonder if the S&P sent the buyer of the top a certificate designating them as that lucky buyer. Probably not though, since the market continues to push to new highs. In fact, it almost feels like there are a group of traders who are begging to be the lucky winner of buying the absolute top. Well, maybe that is just how I feel because I’m usually the one who is trying to sell the top tick – an impossible feat these days – but that is the contrarian trader in me that just won’t quit.

arewethereyetThe markets finally made it though, and while I can’t say the highs are in just yet, everything is happening according to plan. What I mean by that is that as a student of Elliott Wave one learns the mechanics of the wave structures and also the personalities of the different waves in progress. For example, within a 5-wave structure the third wave is normally the longest and the strongest within the sequence. We can now apply that same statement to the various degrees within the larger pattern in progress. Now the next piece of the puzzle is that within a 5-wave structure wave 5 will ultimately move higher or lower (depending on the direction of the trend), but without the same power or strength seen in the 3rd wave. Those that have been reading my analysis over the past year or so know that I have been consistent in calling for new highs while also calling for a correction to take place first. This has remained the case for months now and progress towards the ultimate high continues to unfold without any hiccups yet. However, I have been also repeating myself that the broader indexes will likely move to new highs on “negative input”. Has that been the case – you bet!

geopoliticalSo where are we within the larger picture? The DJIA has now joined the new all time high club and while the volumes have been all but present I believe there are still additional new highs to come. We haven’t really seen any strong capitulation nor have we seen a flood of new money coming in believing the markets are “breaking out” from new highs. This leaves me with the same opinion in that the markets continue to “chug” along in fulfilling their destiny. At the moment I continue to favor the May to July window for the penultimate top to be registered, which is likely to coincide with the FED actually raising rates, (maybe at a faster clip than what is currently expected). Or perhaps one of the several geopolitical situations swirling around the globe will crack open leaving a swath of destruction similar to an F-5 tornado moving through the Midwest. I also need to add that I don’t expect the markets to “crash” immediately off of the high tick. Can that occur, of course, but the reality of it occurring is not as strong. Having an understanding of Elliott Wave will allow you to put some context around what and how the next leg down will look like. Since the pattern in progress is a bull market of Grand Super Cycle degree the expected correction or bear market will be signaled by an initial 5- wave decline of at least Cycle degree. However, I suspect it will go unnoticed by the majority of analysts and traders due to the failure to recognize the “writing on the wall.” It is likely to go unnoticed until the “point of recognition” which is normally within a third wave within a third wave. This is a point where the masses begin to have the “oh crap” moments and to be honest we are several months if not a year or more away from that.

elliottwaveThe idealized Elliott Wave progression of a five-wave sequence could be viewed as follows, bear in mind the large the degree the greater the psychological impact as well as a greater financial impact:

  • Bottom (start of wave 1):
    • Large degrees: questions of existence, survival: depression; war.
    • Intermediate degrees: recession: “panic”; limited wars.
    • Minor degrees: often accompanied by “bad news.”
  • Rebound (within wave 1): From undervalued levels, recognition of survival.
  • Test of Lows (start to bottom of wave 2): Fundamental conditions often as bas as or worse than those at the previous bottom. Underlying trend considered down. Does not carry to new low.
  • Powerful Wave (start and formation of wave 3): Strength. Breadth. Best fundamentals. Increasing real prosperity. By the end of wave 3, the underlying trend is considered up. Wave often subdivides. Is never shortest wave.
  • Surprising Disappointment (start to end of wave 4): Signals the best part of growth phase has ended. Does not enter price territory of wave 1
  • Final Advance (start to finish of wave 5): Market performance and fundamentals improve, but not to the levels of wave 3. Psychology creates overvaluation.

Now let’s update the current market position. The surprising disappointment, which marked the completion of Grand Super cycle wave IV, was the financial collapse of 2008 – 2009. Unfortunately, the majority failed to realize that the best part of the global growth phase had ended. Off of that low, the final advance began. True to form while the market performance and fundamentals have improved they have not and are not likely to equal the levels of wave 3. However, the psychology has certainly created a severe overvaluation as the broader indexes continue to push to new highs. With all of the aforementioned in mind let’s take a look at the current chart, (included below) for the DJIA.

2015-02-18-TOS_CHARTSDJIA_Monthly

The current Elliott Wave count reveals that the DJIA began Grand Supercycle wave V off of the 2009 low. Within wave V, four waves of SuperCycle degree are complete as labeled on the chart below in gold (I, II, III, IV). Therefore the market began the final Supercycle wave V off of the late 2014 low. Within wave V it appears that Cycle waves 1 and 2 are complete with wave 3 in the beginning stages. A common relationship within 5- wave structures is that wave 5 is equal in length to wave 1. If this proves to be the case within the current structure we can begin to formulate a possible zone in which the entire sequence will complete – wave V would be equal in length to wave I at 20,643, approximately 2600 points away. The market does not however, need to reach that level to complete the larger structure in progress. The internal count will take precedence to price level and may well come in below the level mentioned above or above it. As the sequence progress we’ll be able to refine the target(s). More importantly though is the reality that the market is completing a bull market that has been unfolding since the beginning of the 20th century. That makes it over 115 years old. Is it any wonder that most analysts can’t envision anything but a continuous climb higher?

keyinsandRemember the key is being able to reduce and separate the “noise” from opportunity. This takes knowing and executing a well-defined strategy and allows you to see opportunities amongst the “chaos” and by trusting the mechanics of your strategy, be able to take advantage of them. Opportunity continues to knock on our doors. While it doesn’t come without risk, risk can be defined and more manageable. Volatility and broad moves are exactly what a day trader desires and being able to respond without questioning is a luxury many are unaware of.

tradersThe Logical Signals Trade Room is up and running. We have an outstanding group of members that have already begun contributing across the board from trading indicators, patterns and products, to computer software and hardware. Thus we are ready to move on to phase two of membership/subscriptions. Now that a core group has been established we have a few additional spots for other traders that may have an interest. Phase two, though will be somewhat more involved in that prospective members will get a chance to talk in more detail on their trading goals, experiences and expectations with me and possibly other members before deciding to join. At this early stage it is important to continue to steer the room in a direction that favors all of the members. Should you have an interest please contact me at Michael@logicalsignals.com I should have the updated “Invitation to My Trade Room” under the Trade Room tab back in place soon. Presently we have 10 to 15 additional spots open before closing this room until next year.

Steer the course and don’t compare yourself to everyone else. You are not they and they are not you. Remember to trust and believe what makes you unique at this moment in time and in this situation and allow others to choose for themselves. Don’t be swallowed up by the chaos and false emotions swirling around. Remember it’s just a number.