Saturday, February 8, 2014

Jobs Report and Market's ~200 Point Rally

While job report was not very good, markets rallied none the less (as mentioned in the last update). As a result of this rally, many bulls who had just turned bears near the bottom and were expecting a bigger correction, are now reverting to their bullish stance. This is the danger of investing blindly in the market without knowing the real drivers of the market.

Although fundamentals do drive the market to a certain extent, only price pays. Therefore, one should keep a close eye on the price before making an investment decision. 

At this point, with yesterday's sharp rally, price is following the structural pattern that we have been defining on the blog for the past few days. Elliott Wave analysis suggests that the recent decline has been a 3-wave down affair. 3-Wave moves are corrective in nature and therefore, this means that higher highs can be expected in the future. Following structure shows this wave count.

Please note that some Elliott Wave practitioners are interpreting current decline in different ways. However, we will not delineate the alternatives as they don't really add value to trading. What does add value to trading is the IPM Trade Matrix's trades in conjunction with the IPM Turn Window. IPM Trade matrix will enter a trade during the next IPM Turn Window based on market completing proprietary trigger levels.

Next week will be very interesting for the markets. Jenet Yellen (New Fed Chairwoman) will be testifying in front of the congress. She will address her approach towards QE policy and economic activity in the U.S. We also are approaching the new debt ceiling deadline (Feb 27). As we have seen in the past, markets can get very interesting during the debt limit debate in the congress. Therefore, markets will have a lot to absorb next week.

Market should stay above 1735 (SP500) to maintain the bullish argument. 

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/Short?

Condition: Within IPM Turn Window (Bottom/Top) - Info already sent to subscribers
Trigger: - 
Supporting Indicators: Up Trend OR Absence of decline intensity + Next IPM Turn window is 3+ weeks away

Profit Target 1: -
Profit Target 2: - 

Stop: After trade is triggered
Trailing Stops: - 
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk: N/A (Entry = - , Exit = - , Risk = - )
Risk Reason: -

Applicable Rule: 
  1. Do not go long or short without trigger to prevent losses by market moving against you.  
  2. Will be shared over the next week

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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