Last Thursday I mentioned already that WLSH5000 had bottomed and presented the ideal 50-76.4% target zone, and why I turned bullish last Wednesday. Well, 5 days later and here we are. That was an easy trade. I was long (SPXL) from SPX-1880 and SPX-1835 and exited both positions at SPX-1930 and SPX-1920 today. Can’t complain! 😉 Too easy almost. And, no, IMHO, it’s not about nailing the exact bottom or top, it’s about being on the right side of the trade and catching 75-85+% of a move. Or as Buffet once said: “I got rich by selling too early”. Stick with that and don’t loose sight by trying to nail the bottom or top; you won’t see the forest for the trees…
Enough about trading advice, what’s next? Now with the WLSH in the preferred target zone, but with only 3 small waves up, I think we’ve only seen intermediate a, and likely not all of it. However, it stopped nicely and exactly at the 61.8% retrace, so I will out a tentative “?’ label. At about 20,688 (SPX 1956) minor c = a, which is about where the 50d SMA now resides: test from below!? though at the current price c is about 0.764x a, and also an acceptable Fib-relationship, though less common.
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After this up move completes, which has now become extremely OS on the hourly and on the daily RSI (5), 93 and 72, respectively, I expect a 3-wave decline for intermediate b. Note that there are several conflicting readings on the daily chart; where we did get a MACD-buy crossover, FSTO suggest more upside, but volume is lacking and price is facing some serious resistance. Also, please see the first picture in which you can see that price is still quiet some ways away of reclaiming the long term trend channel -established since Nov. 2012- it fell out last month… For now I see the upside potential lessening by the day, with downside risk increasing.
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