Friday, September 13, 2013

Market Analysis & Action Plan

Initial Target has been met for the long trade.

Following reasons for concerns are now appearing in the market:

  1. TRIN reading is at a point which has coincided with previous rally pauses. TRIN is suggesting an over-extended market
  2.  NYMO gave a sell signal few days ago. So it is something to look at with all other indicators piling up.
  3. NYAD and TICK: Both are not suggesting that recent rally has been broad based. Therefore, one should be on the lookout for potential downside.
  4. Money Flow Index: Has not registered an overbought reading, which means the potential for a rally continuation are bleak. Money flow index overbought reading typically suggests rally continuation.
  5. Sentiment is getting very frothy, especially from a put/call ratio perspective
  6. Elliott Wave analysis suggests that DJIA and SP500 are carving out 2nd waves, with final rally approaching soon.
  7. Global Dow has approached overbought levels. These levels have previously corresponded with near term declines.
  8. We are approaching a minor IPM turn window (subscribers: please consult IPM model update).

Keeping all of the above in mind, following action plan makes sense:
  1. Exit (1/2) around 1690
  2. Exit all in the near future to protect against Fed's decision and market's knee jerk reaction
  3. Re-enter during next IPM model turn window
  4. Exit by earnings
  5. Overall, market is setting up for a lower high at the next Major IPM model turn window (please consult IPM Model update sent on September 5, 2013). This trajectory is highlighted in the IPM Model library

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