Thursday, February 13, 2014

IPM Trade Matrix Update - Trade 5 (Part 3)

Market Overview
Today's market action was line with the assumption that markets are in an uptrend. The way market recovered from a bad open, was very impressive. Although sentiment is still pessimistic to a larger extent, which is good for the market going forward, one measure is showing excessive optimism. This could be a sign of near-term weakness. 

Overall, IPM trade matrix is staying long and might add to long positions if there is more dip. Markets might rally upto the 1850-1870 region and then experience a minor pull back. This will be in-line with the overall Elliott Wave structure of the market. As for the risk management part of this trade is concerned, we have identified trailing stop levels for the market. But it STOP level will remain inforce till we come out of the IPM Turn window.

Since a lot of people are still paying a lot of attention to the 1929 analog, it might be good for this rally. On the other hand, Gold is breaking out. At UST, Gold's bottom was predicted in July 2013 and till now that bottom has held. We will see how gold reacts over the next few months, but it could be the start of something big. 

IPM Trade Matrix 2014 Trades

TRADE - 1: (Long) = +2.6%
TRADE - 2: (Short) = +9.3%
TRADE - 3: (Long) - Non IPM Trade Matrix trade -0.2%
TRADE - 4: (Short - 1/31/14 to 2/5/14) +7.25% 

TRADE - 5: Long
Long TNA at 70 ==> new TNA basis = 69.94 (added few longs today) 
Longs were initiated on 2/11/14 and 2/13/14 based on IPM Trade Matrix Trigger and Elliott Wave structure. More might be added if opportunity comes within IPM turn window. 

Condition: Bottom within IPM Turn Window 
Trigger: Rally above SP500 = 1789, DJIA = 15790, Russell 2000 = 111.5, Global Dow = 2401
Supporting Indicators: Up trend (8/4 Test has not been completed), Next IPM can be either Top/Bottom

Profit Target 1: 1870
Profit Target 2: 1930

Stop: Break below 1750 (valid till we are within IPM Turn Window)
Trailing Stops: Break below 1780 (SP500) and 15720 (DJIA)
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk: 1.8% (Entry = 1813 , Exit = 1780 , Risk = 1.8% )
Risk Reason: There are multiple reasons to be worried: 1929 stock market parallel, 8/4 Test to the downside is in process, and major IPM Bottom window in process.  

Applicable Rule (There are 7 Rules in the IPM Trade Matrix. Following are applicable to the market right now): 
  1. Do not go long or short without trigger to prevent losses by market moving against you.  
  2. Exit half at profit objective 1. Exit full at profit objective 1 if proprietary momentum continuation signals are not present.
  3. Observe stop-losses to minimize draw-downs

Note: 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.

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