Thursday, March 27, 2014

IPM Trade Matrix - Trade 7 (Part 6)

Market Overview

Whereas US markets continued their sideways action, Global stock market continued their rally especially the emerging markets. We now have a very good setup in terms of sentiment to start a significant rally.

However, time has ran out for the market. Therefore, break below 1839 in SP500 will trigger a sell signal. If the market resumes to rally, it is possible that the market could continue its rally into May. And the rally could be stronger than expected.

Following chart again shows the global stock market index on a longer-term time frame. It has been updated with latest data, and shows that the global index is trying to break out of the longer-term triangle.  

If the market fails to abide by the triangle scenario and makes a new low outside of the IPM Model turn window, we will exit the long trade. 

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 ==> 82.7 (added longs on 3/19, 3/20, 3/25, 3/26) 
More longs were added based on IPM Turn Window risk reduction 
Trade was initiated on 3/18/14 based on IPM Trade Matrix Trigger. IPM Trade Matrix has been updated and future trades will include a new fail-safe to ensure trade entry near the break-out and reduce uncertainty.    

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 based on Elliott Wave structure. Provisional Stops: SP500= 1840, GDOW = 2450, DJIA = 16125
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.

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