Monday, March 3, 2014

IPM Trade Matrix Update - Trade 6 (Part 6)

Market Overview
Today's market action did not trigger a sell signal. So we are still long. 

Today's decline however, did result in a classic trigger for 2nd long entry per IPM trade matrix. Per IPM Trade Matrix, between two IPM turn windows IPM trade matrix can go long based on either an Elliott Wave trigger or a Proprietary Level-based trigger. 

Longs were already initiated last week based on EW trigger. Today market tagged the Proprietary Level-based long trigger. However, since we are already long, no new positions were added.

As for the current market structure, it seems like market is setting up for a sharp rally. Following chart shows that the current market structure can be best counted as a series of 1s and 2s. Second 1st wave is overlapping in nature and can be either regarded as an ending diagonal or 1st wave of a minor degree.

If market is tracing out a series of I II & 1 2, we will see a sharp rally soon and the market should not violate today's low at 1836. This scenario would mean that the rally would last for almost 2 weeks. IPM Turn window update will be emailed to subscribers tomorrow. Alongside, IPM turn window, another timing model has triggered a buy signal. This model is lining up very well with the IPM Turn Window.

If market fails to rally strongly and the current decline resumes with decline below today's low and a close below trailing stop level (very low probability), we will exit the long trade. This would suggest that the ending diagonal pattern is being traced out and one should get defensive. However, there will be no reason to short this market. 

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) = +9.8%

TRADE - 6: Long
Long TNA at 69.94 ==> 72.75 (added longs) ==> 74.85 (added longs)
Original trade 6 longs were initiated on 2/7/14 based on IPM Trade Matrix Trigger. More longs were added on 2/24/14 and 2/26/14.  

When: Outside IPM Turn window. 
Trigger: EW pattern completion. Current pattern suggests that the correction is over or will soon be over. Rally above SP500 = 1851, Global Dow = 2472
Supporting Indicators: Up trend, Next IPM turn window is a Top, Next IPM Turn Window is 1-2 weeks away, Rise has been impulsive in nature

Profit Target 1 (SP500): 1908
Profit Target 2 (SP500): No target # 2 on 2nd trade
*TNA profit objectives might be different than SP500

Stop: Break below SP500 = 1810, DJIA = 16000, GDOW =  2440
Trailing Stops: Close below SP500 = 1837 , DJIA = 16105, GDOW = 2455
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk: 1.1% (Entry = 1850, Exit = 1837, Risk = 1.1% )
Risk Reason: No significant reason for concern. Market needs to hold critical levels and we will see higher levels  

Applicable Rule (There are 7 Rules in the IPM Trade Matrix): 
  1. Do not go long or short without trigger to prevent losses by market moving against you.  
  2. Exit all at profit objective 1 because its the 2nd trade with IPM Turn window. 
  3. No Trade in opposite direction
  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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