Thursday, May 19, 2011

Market Bottom? - May 19, 2011 - Before Bell

"Whoever keeps his affairs in order with God (follows His orders sincerely), God will also put his affairs with men in order; whoever makes arrangements for salvation, the Lord will arrange his worldly affairs; whoever advises his own self, God will also protect him." Hazrat Ali (A.S.)

Based on current sentiment readings, historical perspective, indicator's analysis and Elliott Wave structure, it seems that we are approaching an inflection point. Therefore, one should be ready to buy the market. This observation is in agreement with the Inflection Point Model. Market Matrix is given below. 

There are many green lights. With very good risk-reward ratio. It appears that we are nearing a bottom, within a primary uptrend. This bottom  will be confirmed by a break above 1345(closing). It is a good time to buy with cycles bottoming, technical improving, sentiment  neutral to pessimistic  and  waves complete.  We will wait until verification from the trading model before going long.

Various supporting wave structures will be discussed in next post, while the cycle turn dates have already been discussed in the last blog update. In Elliott Wave terms there are two potentials:

1- Ending Diagonal: Up potential 1390
2- Sequence of 1,2 and 1,2 up: Very high potential
3- Sequence of 1,2 and 1,2 down: Low potential 

These supporting wave structures will be discussed in the next post with appropriate market levels. 

Even with all of this analysis, one should always remember that only price pays. Therefore, one should always trade in the direction of the primary trend and have a comprehensive risk-management strategy. 

Thus, in terms of Risk-Management the market is currently buy-able as long as it does not close below 1319. Furthermore, uptrend will be re-confirmed on a close above 1345 (SP500).

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