IPM Trade Matrix - Trade 2 (Part 3)

Market Overview

Recent market action has not only validated the accuracy of the Inflection Point Model (by the grace of God), it is also supporting the argument that the IPM Trade Matrix is a robust trading mechanism because it can adapt to different market conditions in advance (like it did recently). The goal of IPM Trade Matrix is to make trading a system with out emotions and generate consistent results. Consistency is the key to success in the world of investing.

By every passing day, market action gives the feeling that this correction could be a start of something big. Market has initiated the 8/4 Test. First step is almost complete with the test of 1770 level. Now the second step would be the Test. If the test fails and market break below critical levels, we will enter a downtrend. By the ways things are going right now, we might enter a downtrend in February. 

If market does enter the downtrend, we would have to switch to the Downtrend section in the IPM Trade Matrix. This would mean that we will enter one more trade by the next IPM Bottom window.  

For the time being, market's structure is nearing completion before rallying for few days. Near term structure looks very impulsive. Whereas, in SP500 it is missing only one more down move before the rally can start, wave structure looks complete for Nasdaq and Russell. 

It is possible that the rally might start on the Fed's news and might till the end of January. We will continuously evaluate the market structure to identify critical levels for counter-trend rally completion. But if January ends negative, there is a very high probability that it will be bad for the entire year. 

Trade 2 Complete 

TRADE - 1: Summary of Trade 1 (Long) = +2.6%

TRADE - 2: Summary of Trade 2 (Short) = +9.3%
Long TZA (short ETF) at 16.85 ==> Exit at 18.41 ==> +9.3%
Short positions were added on 1/23/14 and 1/24/14 based on IPM Top window expiration and subsequent break below critical level (Trade 1 - risk realized)

TRADE CONDITIONS
Condition: High within IPM turn window - Top. Next IPM window is a Bottom and is 3+ weeks away.  
Trigger: Decline below 1835 (SP500), below 16400 (DJIA) and below 2473 (Global Dow)
Supporting Indicators: Lack of proprietary momentum thrust in upwards direction, Influence of weekly IPM and High within IPM turn window
PROFIT TARGETS
Profit Target 1: 1770
Profit Target 2: 1724

Note: Exited all positions at Profit Target 1 because of Rule # 3: Exit all shorts at Target 1 if decline continuation signal is not present from proprietary momentum indicator and buy signals generated by key indicators. Moreover, Elliott Wave count is close to near-term completion. Re-evaluate situation in next 2-3 days to be ready for another short entry. 
RISK
Stop: Rally above SP500 = 1849, DJIA = 16498, Comp = 4246, Rut = 1181 (3 of 4)
Trailing Stops: SP500 = 1836, DJIA = 16310, GDOW = 2470 (Trailing stops will be updated next week - 1/31/14) 
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk: N/A 
Risk Reason: No significant risk because upcoming turn date is a bottom.

Applicable Rule: If short with last IPM ~2 weeks ago & next IPM a bottom, review proprietary momentum indicator (combination of 5 indicators). If momentum = 1, stay till Profit 2, else exit all at profit 1 and re-enter later. 

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.

IPM Trade Matrix - Trade 1 (Part 6)

Market Overview:
Market has been going sideways. This kind of market action suggests that the market is getting ready for a blast higher. There is no significant hindrance which can stop the market from rallying. Although market driving news typically comes from the left field, market structure is suggesting smooth sailings for the next 2-3 weeks. Details about the next market turn date has been e-mailed to subscribers. Overall, it seems like market wants to give Chairman Bernanke a standing ovation before his departure from the Fed towards the end of this month.

As per Elliott Wave structural analysis, market is setting up for a sharp rally (wave 3 of a minor degree) - possibly into the early February.

As far as the IPM Trade Matrix trading is concerned, we are still tracking this trade below and will continue to do so till we exit the trade.

First Trade of 2014 is in process:

SP500 (1/16/14) = 1844
DJIA (1/16/14) = 16414

TRADE
Long TNA at 76.25 (original) ==> 76.6 (new)
Long FAS at 92.30 (original) ==> 91.6 (new)
Long TSLA at 171.2
Long positions were added on 1/14/14 & 1/16/14 based on IPM Bottom window expiration and low risk scenario

Condition: Next IPM Window is Top or Bottom
No. of Trades between turn windows: 1
Triggered (Updated at End of Day on 1/9/14): Rally above 1837 (SP500) and above 16450 (DJIA)
Profit Target: 1885-1890 (Will be evaluated as Elliott Wave structure matures)

RISK
Stop: Below SP500 = 1816, DJIA = 16217, Comp = 4090, Rut = 1141 (3 of 4)
Trailing Stops (updated on 1/15): Close Below SP500 = 1835, DJIA = 16442, Comp = 4170, Rut = 1160 (3 of 4) 
Typical IPM Trade Matrix Risk: 1.5%
Actual IPM Trade Matrix Risk (1/15/14): 0% (Entry = 1837, Exit = 1835, Risk = 0%)
Risk Reason: IPM Top is approaching. Market needs to hold during this top window, otherwise we can see a serious correction. Rise above 1850 will neutralize this risk

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

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.