Monday, February 10, 2014

Market Analysis and Upcoming IPM Trade Matrix Trade

Market has started consolidating its gains that it made last week. This consolidation can be a sideways affair or can result in a deeper decline. There are many market moving events coming up in the near future that could result in a market decline. Tomorrow Ms. Janet Yellen will speak to the Congress. Any of her mis-timed comments can result in a market decline.

This is a strange situation for the new Federal Reserve's Chairwoman.On one hand, she might want to justify the tapering of stimulus but on the other hand, she would also want to add that the Fed is ready to act with more stimulus. Therefore, markets can behave strangely tomorrow and on Thursday because she will again testify on Thursday.

Overall, market structure is ripe for a pull back. Market rallied sharply over the last week (as seen below) and needs to absorb these gains. From an Elliott Wave perspective, this could come in 2 different forms:

  1. Sideways & choppy market action for the next few days till market bottoms
  2. Sharp decline. This decline could either make new lows or result in a higher low

From an Elliott Wave perspective, market's higher low will be treated as the 2nd wave. This will be followed by a sharp rally, possibly to all time highs. Last time we saw a higher low during an IPM turn window was in February 2010. This low gave way to a ~2 month rally. We will continuously evaluate the market structure and trade base on IPM Trade Matrix.

Reason for not going long already is that one of IPM Trade Matrix's rule states that one should only trade after the trigger. Trade has not been triggered yet. Therefore, we are on the sidelines to prevent losses by market moving against us. Capital preservation is much more important than some gains without following the system.

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

Condition: Bottom within IPM Turn Window - Date info e-mailed to subscribers
Trigger: Rally above critical levels after a decline. Level will be outlined within next few days
Supporting Indicators: Up trend OR Absence of decline intensity + Next IPM Turn window is 3+ weeks away

Profit Target 1: Will be determined after the entry
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. Exit half at profit objective 1. Exit full based on IPM Trade Matrix Rule #3

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.

For Blog updates on Google+ add: Understand Survive Thrive 
For Blog updates on Twitter, add: @survive_thrive

1 comment:

  1. went long today. Details will be provided tonight.


I would love to hear from you! Please leave your comment below!!