IPM Trade Matrix - Trade 1 (Part 3)

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.

First Trade of 2014 is in process:

TRADE
Long TNA at 76.25 (original) ==> 76.6 (new)
Long FAS at 92.30 (original) ==> 91.5 (new)
Long positions were added on 1/14/14 based on IPM Bottom window expiration, and low risk scenario

Condition: Next IPM Window is Top or Bottom
Trigger (Updated at End of Day on 1/9/14): Rally above 1837 (SP500) and above 16450 (DJIA)
Profit Target: 1890


RISK
Stop: Decline below SP500 = 1814, DJIA = 16217, Comp = 4095, Rut = 1141 (3 of 4)
Trailing Stops: EW & Trailing stops will be determined after by 1/17 & after IPM turn window passes
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk: 1.2% (Entry = 1837, Exit = 1814, Risk = 1.2%)
Risk Reason: Wave 3 down might start.  Risk will be mitigated by the stops


Alternative: 

• Decline below IPM Model Bottom with Next major IPM (3-4 weeks) turn being a Bottom after 8/4 Test completed = Go Short
• Decline below IPM Model Bottom with Next major IPM (3-4 weeks) turn being a Top = Stay Neutral till trend changes (8/4 Test)

Applicable Rule: If next minor IPM turn window is within 2 weeks then wait for a confirmation break before exiting longs. 


Structure

IPM Trade Matrix - Trade 1 (Part 2)

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.

First Trade of 2014 is in process:

TRADE
Long TNA at 76.25
Long FAS at 92.30

Condition: Next IPM Window should be Top or Bottom
Trigger (Updated at End of Day): Rally above 1837 (SP500) and above 16450 (DJIA)
Profit Target: 1890



RISK
Stop: Decline below SP500 = 1814, DJIA = 16217, Comp = 4095, Rut = 1141 (3 of 4)
Trailing Stops: EW & Trailing stops will be determined after trade is entered & IPM Model Turn window passes
Typical IPM Trade Matrix Trade Risk: 1.5% (Entry = 1837, Exit = 1814, Risk = 1.2%)
Risk Reason: Wave 3 down might start.  Risk will be mitigated by the stops


Alternative: 

• Decline below IPM Model Bottom with Next major IPM (3-4 weeks) turn being a Bottom = Go Short
• Decline below IPM Model Bottom with Next major IPM (3-4 weeks) turn being a Top = Stay Neutral till trend changes (8/4 Test)

Applicable Rule: If next minor IPM turn window is within 2 weeks then wait for a confirmation break before exiting longs. Confirmation break as of 1/14/2014 = Stop levels

IPM Trade Matrix - New Trade

We will be posting IPM Trade Matrix Trades in the first half of 2014. This is an experiment to understand and enhance the capabilities of this Matrix.

First Trade of 2014 is in process:

Long TNA at 76.25
Long FAS at 92.30

Condition: Next IPM Window should be Top or Bottom
Trigger (Updated at End of Day): Rally above 1837 (SP500) and above 16450 (DJIA)
Profit Target: 1890
Stop: New low outside of IPM bottom window. EW & Trailing stops will be determined after trade is entered & IPM Model Turn window passes

Typical IPM Trade Matrix Trade Risk: 1.5%
Risk Reason: Wave 3 down might start.  Risk will be mitigated by the stops


Applicable Rule: If next IPM turn window is within 2 weeks then wait for a confirmation break before exiting longs.

Please note that this system is being developed on an experimentation basis, and will evolve over time. It will be interesting how market behaves on tomorrows unemployment report and earnings releases.

IPM Trade Matrix Update - Jan 8, 2014

According to IPM Trade Matrix, market is approaching a trade:

When: During IPM Bottom Window
Condition: Next IPM Window should be Top or Bottom
Trade: Long
Trigger: Rally above 1840 (SP500) and above 16550 (DJIA)
Profit Target: 1890
Stop: New low outside of IPM bottom window. EW & Trailing stops will be determined after trade is entered.

Typical IPM Trade Matrix Trade Risk: 1.5%
Risk Reason: Wave 3 down might start.  Risk will be mitigated by the stops


Applicable Rule: If next IPM turn window is within 2 weeks then wait for a confirmation break before exiting longs.

Very Interesting Point in Markets

Markets rallied very sharply today. This is in line with the IPM Model analysis that was sent to subscribers.

However, it gets very interesting at current levels. Today's rally came on the heals of Federal Reserve's tapering decision. Ben initiated the tapering processing before he left, so that Janet doesn't get the blame for tapering. And Janet can continue with tapering over the coming years.

Pretty much everyone knows that tapering could be bad for stocks. And in response stocks staged a nearly 300 point rally, which took many market participants off-guard. However, there are several reasons for concern about today's rally:

1. Rally did not trigger breadth based buy signal, which is bad. This means we will not see a long lasted rally phase.
2. There is divergence between DJIA and DJ Transportation average
3. SP500 is still below December 9th peak
4. Russell 2000 did not rally as aggressively as DJIA
5. Weekly IPM Top is still in play, till new high is made
6. Next Daily IPM Turn date suggests that we will soon see further decline in the market
7. MFI based timing model also had a sell signal during 12/9/13 top.
8. Elliott Wave analysis suggests that we just saw a wave 2 rally, which will be followed by a persistent wave 3 decline. This decline could last for several days (if unfolds).
9. Global Stock Markets are declining. Some markets like FTSE 100 have entered a bonafied down trend by completing the 8/4 Test on a weekly time frame.

In conclusion, today's rally might be a classic bull trap. This assumption will be invalidated by a market rally above 12/9/13 top in several markets such as Russell, SP500 and DJ Transports.

IPM Model has been E-mailed to Subscribers

Subscription will be temporarily closed in January 2014. It might re-open in 2014.

IPM Model Update has been e-mailed to Subscribers

Note: Subscription might close in January. At that point, only current active IPM Model subscribers will keep on receiving IPM update. There is no timeline as to when IPM subscription will re-start.