IPM Model Readings

Software is working again and I am back from my trip. Following is the latest output of the system. 

Detailed analysis will be emailed to subscribers soon.

Up, Up and Away!!

Financials are ready to break out. Earnings season has started.

Financials have been consolidating for the past few months, since May. From May to October, 5 months of consolidation have refreshed financials. They can now rally, along with the rest of the market.

Rally might extend to weekly IPM Model top date.

IPM Information

As I am on international travel, IPM Model software is not working. I am trying to resolve the issue. Update will be sent to subscribers as soon as possible.

Tentative

Next turn date = Top, 

New high after last IPM Top Date October 7 => Continued rise

There is a high potential of a rally till end of October

Tomorrow will be a Big Up Day but then...

It is getting very interesting. I think, I finally have a good understanding of the market's Elliott Wave structure. And according to this structure, we might one more high before the Top is in.

Can that Top today? This is the big question!!

Is this a Chance to Go Short or Long??

Its a very confusing time for trading. On one hand there is discussion about potential resolution of the debt-ceiling and government shutdown issues. And on the other hand, there is a confluence of technically time-tested indicators suggesting that there is a significant potential of market decline ahead.

From a Bull Perspective:

1. It is difficult to quantify the decline from an Elliott Wave perspective. Whenever such situation arises it begs the question whether recent decline was only a sideways correction. And from an Elliott Wave perspective, it seems like a sideways correction. Therefore, we should be expecting further rally.
2. Today, we are also hearing about potential resolution of stalemate between congress and the president.  

Bear Perspective:

1. Trend has turned down in DJIA
2. IPM Model top window is at hand. IPM model turn window has a success rate of 90%+.
3. One of the indicators (very good success rate) is suggesting continued decline
4. Lower high within IPM model top window is always a bad omen. Results in a downtrend 95% of the time.

Therefore, it is one of those times where we should let market decide its direction. If I am to take a guess, I would go with further decline. But in any case, we should make a trading plan to eliminate risk from trading. And for current trading plan:

Go Long: If market goes above XXX, after xx October. Rally might continue till next IPM turn window (will be emailed to subscribers).

GO Short: If market goes below YYY, by xx October. Decline will resume for next few weeks.

September IPM Model Update Review

On September, the IPM Model update predicted the following (Link to Document):

Scenario 1: Market Rises with brief Sideways Action & Tops around 10/7 (High Prob.)

Reasoning: Above mentioned fundamental reasons are very well known. And therefore, many 

people will stay away from the market during this time because market likes to fool the 

majority. Furthermore, wars are typically declared in a bear markets, not near all-time highs. 

Therefore, there is a very high likelihood that no strike will happen against Syria, & markets 

will rise till next earnings period with intermittent periods of sideways action.

Critical Level: Close below 1640 (Friday’s low).

In retrospect, all indices followed this road-map except for DJIA. DJIA had issues with re-configuration of its components. 

September had 4 turn dates (2 major and 2 minor):

TURN WINDOW (AUG 30 +/- 4 DAYS): Marked the Bottom at 1628

TURN WINDOW (SEPT 10 +/- 4 DAYS): Marked the top

TURN WINDOW (SEPT 27 +/- 4 DAYS): Marked the bottom for re-entry purposes in Russell 2000/Nasdaq

TURN WINDOW (OCT 7 +/- 4 DAYS): Marked the Top in Russell 2000 and Nasdaq 

Yesterday's decline was the sharpest decline that we have seen in a while!!

Now the question is, when will this decline end. The answer will be based on the IPM Model Turn Date & the next IPM Turn window status (Top/Bottom) in conjunction with Market Matrix analysis.

Market Decline Update!

So we have seen the market top per IPM Model top date (scenario 2), as mentioned in the last blog post. Today's decline is broad based and ranges from Russell 2000 to Nasdaq. Market top took place within the current IPM turn window (Oct 7, 2013), and during this top date SP500 & DJIA put in a lower high.

Now the question is when is the market going to bottom & has the trend changed? And is this time to go short?

According to IPM Trading model:

Short Trade in an Uptrend = If next IPM Turn window is a bottom. If next turn window is schedule to be a top then no trade

IPM Model update will be sent over the coming week, and will highlight the next IPM turn date & whether it will be a top or bottom. I will try to send it out earlier! 

Please note that bottoming signs have started to appear, and its possible that market might soon bottom with the earnings season / resolution of the Debt ceiling issue. We will use IPM trading model and the associated proprietary triggers to enter the long trade.