Wednesday, March 19, 2014

IPM Trade Matrix - Trade 7 (Part 2)

Market reaction to Fed Chairwoman's statements was not totally unexpected. FOMC announcement days are always tricky. With market declining almost 200 points and recovering half of that decline in an hour, speaks volumes about the volatility. 

In any case, we are within IPM Turn Window. Therefore, either market has already put in a low or will make the low in next few days. From an Elliott Wave analysis perspective, market has put-in the low. A confirmation will be break of the critical level defined in prior updates. Still have some powder dry to add to long based on a confirmation. 

Following chart shows the Elliott Wave structure. One can see that the rally from the bottom has taken a clear 5-wave structure. And the decline so far has been a 3-wave affair. Therefore, as long as March 14 low holds, there is a very good chance that today's decline was only a wave 2 decline and we will see a sharp rally in the next few days.

Tomorrow will be an interesting day!!

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 - 2/11/14 to 2/22/14) = +9.8%
TRADE - 6: (Long - 2/22/14 to 3/07/14) = +11.7%

TRADE - 7: Long
Long TNA at 82.45 ==> 82.55 (added longs on 3/19) 
More longs will be added if GDOW breaks above critical level 
Trade was initiated on 3/18/14 based on IPM Trade Matrix Trigger.  

When: Bottom within IPM Turn Window - Date info e-mailed to subscribers
Next IPM Turn Window: Top / Bottom 
Trigger: SP500 = 1861, DJIA = 16300, GDOW = 2470
Supporting Indicators: Up trend based on 8/4 test

Profit Target 1: 1915-1920
Profit Target 2: 1960
TNA target is separate. It might be hit early. If profit target is hit, aggressive trailing stops will be used & we will discuss it on the blog. 

 New low outside of IPM turn window. Since we are within IPM turn window, provisional Stops are at: SP500 = 1838 but will change over time
Trailing Stops: Will be determined next week 
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk: 1.34% (Entry = 1865 , Exit = 1840 , Risk = 1.34% )
Risk Reason: Geo-political uncertainty. Fed's FOMC meeting on March 19. Still within IPM Bottom window => Lower levels are possible.

Applicable Rule: 
  1. Sell (1/2) at profit objective 1 to minimize draw-down (aggressive trailing stops at profit objective)
  2. No Trade in opposite direction
  3. Do not go long or short without trigger to prevent losses by market moving against you.  
  4. Observe stop-losses to minimize draw-downs
  5. If stops are hit ==> Wait on the sidelines for new opportunity near IPM Turn window

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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