Friday, January 17, 2014

IPM Trade Matrix - Trade 1 (Part 5)

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 (1/16/14) = 1845
DJIA (1/16/14) = 16417

Long TNA at 76.25 (original) ==> 76.6 (new)
Long FAS at 92.30 (original) ==> 91.6 (new)
Long positions were added on 1/14/14 & 1/16/14 based on IPM Bottom window expiration and low risk scenario

Condition: Next IPM Window is Top or Bottom
No. of Trades between turn windows: 1
Triggered (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 (updated on 1/15): Close Below SP500 = 1835, DJIA = ?, Comp = 4150, Rut = 1155 
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk (1/15/14): 0% (Entry = 1837, Exit = 1835, Risk = 0%)
Risk Reason: IPM Top is approaching. Market needs to hold during this top window, otherwise we can see a serious correction.

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

In the Bull case, Elliott Wave structure analysis suggests that the market has just completed waves 1 and 2. And we are on the verge of wave 3. As we know wave 3s are strong. Now we need evidence of wave 3 start in market action. Although market can take 1 more day for this structure to mature, we should see a confirmation (new highs) in the near future. 

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