Sunday, December 18, 2011

End of Year Rally or Wash-out!!!

Although the UST proprietary market index is in a downtrend and in a pronounced bear market, major indices like SP500 and DJIA are holding up. However, the following chart shows the possibility of a series of 1s and 2s in the stock market. If this Elliott Wave analysis is true, we might be in for a sharp decline really soon.

On a larger scale, markets are tracing out a Head and Shoulder's pattern. This pattern would mean that we are about to embark on a sharp down move. This pattern will be confirmed of a decline below 1185 (SP500.

The Inflection Point Model predicted that the markets could top on December 5, 2011. Dec 5 has so far turned out to be the top date for Nasdaq and Russell 2000, with DJIA and SP500 topping 2 days later. It seems like the next turn date is 2-3 weeks away (chart given below). Exact date has been calculated and will be sent to the subscribers. Please note that IPM showed a top when everyone was looking forward to the end of year, Santa Claus rally.
Lets see what the last two weeks of 2011 bring for the markets. Please note that according to our wave and time analysis, we are about to witness a sharp decline in to the end of the year. As always, this scenario is bounded with 1250 (SP500) level. A break above this level, will nullify the decline potential.

We will bring down the stops to 1230, once the market decline sharply.

Note: UST market update frequency will increase after December 21, 2011

Wednesday, December 14, 2011

Trading Algo - 12/12/11

Market: Bull (SP500) / Bear (New Index)
Defining Level: 1216 (SP500)
Trend: Up (SP500) / Down (New Index)
Defining Level: 1203 (SP500)
8/4 Trend Change Confirmation (Down to Up): Yes (SP500) – Trend Reversal Confirmed in New Proxy
Current Trade: Short from 1243
Profit Objective 1: 1205                                                 Trailing Stop (closing):  1250
Profit Objective 2: 1168                                                 EW Stop: 1250
Next Trade / Model Based Approach: N/A
Stop:                                                                             Risk (%): 
Risk Associated with trade: 
Turn Window: November 29 (-2/+4 days)
Market completes rally and tops
1-   Market bottoms in turn window
2-   Market tops in turn window
3-   Market double bottoms and breaks out
4-   Market double tops and breaks down
IF the market continues its downtrend, we will soon see acceleration to downside. Another evidence of us being in a bear market is the fact, market failed to close above the 200 DMA on numerous occasions. Without going into details, it appears that the New Proxy index was once again accurate in predicting that we will stay in the bear market for a long period of time. All of this information was shared with subscribers.

This kind of market behavior brings to light the need for patience and persistence, when analyzing the markets. UST Trading Algo pretty much stayed on the sidelines during the choppy month of November (we were short from 1240, but got out just before the big decline because of over analysis!!!), which in itself is a huge achievement.   

A special Euro Update was mailed to Subscribers on Monday. Although this report was written before the EU summit, it predicted that Euro will decline sharply based on a 5 year long pattern. This week Euro came down from 1.337 to 1.299. If you want this special Euro analysis report, please send an e-mail to:

Friday, December 9, 2011

Over Analysis and Trading!!!

There has not been any updates because I did not want the market to whipsaw my thinking again. Over analysis is bad for trading. It deviates one from the major theme. Anyways, a detailed update will be sent tonight. 

Over the last several days, market has gone net sideways. Optimism has came back into the market as seen from from Investor Intelligence, Rydex, Vix and options data. Since we are now in an uptrend, shorting will be risky. As you know that the last IPM turn window expired on Monday, I was waiting for a decisive close above Monday's highs before saying that we will start going up. So far, many indices have topped on Monday!!! On the technical indicators side, the market rally has been very week. All of these developments, in conjunction with the fact that the market is testing its 200 DMA forced me to not confuse myself and the readers by over analysis. 

Therefore, we can say that as long as SP500 does not convincingly break above 200 DMA, one should not go long. If it breaks above 200 DMA, one will re-evaluate the wave pattern and time symmetry to identify potential trades.

Please note that the Euro has not risen as sharply as SP500. There is no guarantee of what kind of decision the EU leaders will take this week. But in the long term, Euro is tracing out a very large HS pattern. This pattern will be discussed in the upcoming blog post. If this pattern is completed i.e. Euro declines below 1315, then the target is in low 1.20s. If this happens, it will significantly affect the stock market. 

Note: Does it mean that the charts are showing us that we are on the verge of a collapse???

Anyways, right now might be a good time to short the market on a decline below yesterday's low and keep a stop above 200 DMA i.e. any where from 1270-1273 etc.

Note: Look at how the market collapsed this morning. Over analysis is not good.

Thursday, December 1, 2011

Crazy Market!!!

This is one of the craziest markets, I have seen since 2008. It kind of reminds me of September 2008 market action, when the market declined for several days and then suddenly jumped up for two days, taking back all the losses. However, this rally was just a bear market rally and what followed was the sudden market crash (late September and early October).

It is so strange that back in 2008 everyone was talking about the financial problems and the government was trying to take action. However, now the European governments are just sitting tight and letting the market decide their fate. Under such circumstances, Central Banks’ intervention is even more dangerous: Central Banks’ know the gravity of the problem, while the investors and governments stay indifferent to it.

So where does it leave us?

First of all, we were in a Bull market from April 2009 to July 2011 (according to UST Bull/Bear filter). But we never saw a 490 point rally during this period. Why?? Does this mean that markets do not rally this hard in Bull markets? However, we did see several 500+ point rallies during the 2008 bear market. There must be some pattern!!!

Full market analysis has been sent via e-mail...