Wednesday, January 15, 2014

IPM Trade Matrix - Trade 1 (Part 4)

IPM Trade Matrix Trades will be posted in the first half of 2014. This is an experiment to understand and enhance the capabilities of this Matrix.

First Trade of 2014 is in process:

SP500 (1/15/14) = 1848
DJIA (1/15/14) = 16482

Long TNA at 76.25 (original) ==> 76.6 (new)
Long FAS at 92.30 (original) ==> 91.5 (new)
Long positions were added on 1/14/14 based on IPM Bottom window expiration and low risk scenario

Condition: Next IPM Window is Top or Bottom
No. of Trades between turn windows: 1Triggered (Updated at End of Day on 1/9/14): Rally above 1837 (SP500) and above 16450 (DJIA)
Profit Target: 1885-1890 (Will be evaluated as Elliott Wave structure matures)

Stop: Below SP500 = 1816, DJIA = 16217, Comp = 4090, Rut = 1141 (3 of 4)
Trailing Stops: Below SP500 = 1835, DJIA = ?, Comp = 4150, Rut = 1155 
EW & Trailing stops will be updated on 1/17 
Typical IPM Trade Matrix Risk: 1.5%Actual IPM Trade Matrix Risk (1/15/14): 0% (Entry = 1837, Exit = 1835, Risk = 0%)
Risk Reason: N/A - Wave 3 down might start.  Risk mitigated by market action

  • Decline below IPM Model Bottom with Next major IPM (3-4 weeks) turn being a Bottom after 8/4 Test completed = Go Short - N/A
  • Decline below IPM Model Bottom with Next major IPM (3-4 weeks) turn being a Top = Stay Neutral till trend changes (8/4 Test) - N/A

Applicable Rule: If next minor IPM turn window is within 2 weeks then wait for a confirmation break before exiting longs. 


Elliott Wave analysis of the Global stock market index suggests that a sharp move to the upside is upon us. This is wave iii of 5 of V. Although we are approaching the end, we are not there and the next couple of weeks can bring sharp gains. 

Current market action is yet another example of the IPM model's validity. Most of the analysts who solely used Elliott Wave analysis to guage the market have missed out on this rally. They are still holding short. Whereas, IPM not only gave the exact bottom window, it allowed us to review Elliott Wave structure in the correct perspective. Hence, enabling us to go long few days ago. 

Lesson Learnt: Trading should not be solely based on Elliott Wave analysis.

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