Monday, March 24, 2014

IPM Trade Matrix - Trade 7 (Part 3)

Market Overview

One thing that has been bothering me since February is the unclear and overlapping wave structure. Overlapping wave structure are a hall mark of market corrections and signify indecision. As a result, we analyzed the market structure from a longer-term perspective with the objective of finding an Elliott Wave structure which can fit the upcoming IPM Model turn.

First chart shows the global stock market index on a longer-term time frame. This chart suggests that the global markets have been tracing out a longer-term triangle since February. Once this triangle is complete, it should result in a market rally. This rally could take the market to new highs.

Second chart highlights another triangle, but this time in SP500. Triangle is supported by the fact that the Elliott Wave structure within the triangle has been overlapping and 3-wave in nature. 

Triangles are corrective patterns and result in market moves in the prior direction. In our case, this direction will be up. This pattern also flows well with the IPM Model Bottom window. We will find out in the next few days (exact days e-mailed to subscribers) how the market plays out. It will be very interesting, especially with less and less people now expecting further upside.

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 ==> 82.75 (added longs on 3/19, 3/20) 
More longs will be added when 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 = 1865, DJIA = 16409, GDOW = 2455 (will be a signal for full long)
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 SP500 stops will be updated by 3/27/14
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. 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.

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

No comments:

Post a Comment

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