Wednesday, June 18, 2014

FED Meeting & Market Structure

Past 2-3 days have been quite confusing. These days kind of remind me of the days before mid May bottom or early April top. Markets tries to get as many people off its back, before showing its true colors. 

UST's current market trajectory hypothesis for the next few weeks is: Decline, Bottom in the IPM turn window, Rally to new highs.

Since the IPM turn window is supposed to mark a market bottom, the next IPM Trade Matrix trade will be a long trade. Current Trade Option Matrix (with a very small portfolio position) is an experimental short trade and will be covered on the long trade trigger.

As you know, in the first half of the IPM trade matrix trigger levels are conservative and in the 2nd half, trigger is much more aggressive.

Following are the reasons, why it seems logical to expect lower prices before a sharp rally:

Elliott Wave structure: Following chart shows an impulsive decline since June 9 minor top. This decline has been followed by choppy sideways action. Sideways, overlapping wave structure is typically corrective in nature and normally gives way to a sharp decline. In other words, know as a bear flag. Furthermore, rally from mid May bottom was a clear 5 waves. This would require current decline to take 3-wave form. So far, we only have 1 and 2 waves. We still need wave 3 to the downside to complete current correction.

Head and Shoulders: DJIA is showing a head and shoulders pattern on the hourly scale. Once this pattern breaks, it should result in significant selling.

Sentiment: Optimism is prevalent and widely spread among market participants. This could provide fuel for the decline.

IPM Model Turn Window: Latest lows in major US indices were put in outside of IPM turn window. Over the past 4 years, it has been a very rare occurrence to see higher low within IPM turn window, in the absence of Weekly IPM Influence Window (WIIW). Therefore, it is logical to expect lower price levels within the IPM turn window.

In any case, if long trigger is activated, long trade will be entered and shorbecause that is the IPM trade matrix trade, and should be respected.


  1. If your trades are based upon predefinded turn dates, why do you care what the fed does? Why do you wait to see what they say?

  2. Yup I agree, Fed meeting or any other event does not make a difference. IPM Model predicted a bottom and that is what we got. Short trade was based on experimental Trade Options Matrix and was not related to the IPM Trade Matrix. TOM has been updated and hopefully with time its performance will evolve.

    If & when its performance comes close to the IPM Trade Matrix, its potential is 5000%+/year return


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