SPX
In a previous article I spoke of seeing the 1250SPX area, and whilst we are at this levels now on the SPX, there is now growing evidence seen in other market to suggest "risk" could be potentially be sold early next year.
The metals appear to be in Ending Diagonals patterns, whilst there has been some spectacular gains from the metals this year, I do caution readers now about locking in some of those gains, and if the pattern does work out the way I suspect and starts a correction, there could be a lot of buyers actually buying into this current rally and they might be finding themselves on the other end of nasty reversal.
With a clear 5 wave advance, it's a case of waiting now for the markets to reversal or show some signs of a reversal, just like this period last year, not many will be thinking that a setup for a reversal is around the corner.
Where most were looking for the floor to drop out around the 1180SPX area, we were looking for a reversal and seeing that 1250SPX target.
With that target being met, now is the time for caution for the bulls on US Equities.
With a 5 wave structure in place, and momentum indicators still waning, caution is advised strongly from these levels for the bullish trade.
We at WPT think there is a potential for a reversal from these levels, having reached the upside target in this 5th wave of an overall 5 wave move, the time to be buying was near the 1180SPX lows, not at these lofty levels.
Time and time again, it still blows me away that investors and traders get bullish at the high of a move, and bearish at the lows, no matter how many times traders get burnt, it seems they cannot get away from this behavior. Buy low; sell high still seems to be the most basic of thing traders seldom seem to be looking for.
Sure there could be move upside from here, but it's also about the reward/risk at these levels.
DOW (11750)
I bought this to member's attention a few weeks back and it's been a target that has been bugging me for weeks, it's a big area on the DOW, the March 2000 highs, as well as the MLK 2008 crash lows and a retest from underneath as a back test, before the crash into Sept/Oct 2008, it also aligns with the mid-fork line, from there I suspect we finally find out if this current rally from the March 2009 is in fact a bear rally in a on-going bear market, or did the 2009 lows actually mark the start of a new longer term bull market.
Personally I don't think that really matters as many analysts would have you believe, because by the time you are wrong on these long term ideas it's usually 3-5 years.
That's a long time to be wrong on an idea. It's also something we at WPT are not prepared to happen, we don't follow super macro Elliott wave counts, as in the authors opinion, they are simply worthless.
The real $$ trades are made on the 15/60 & 240 min charts. This is what we have been doing for the past few months, since we opened the doors to the public.
When an idea is busted we simply toss it aside and look for the next idea, we don't cling on to the some super macro thesis, or larger wave count.
When looking at approximately 15-20 markets a day, generally speaking there is always something setting up.
Whilst I have my own views on long term ideas, price is all that matters, as the bears have found out.
At WPT, we don't only trade the ES (US Equities) we trade many other markets that actually move, whilst ES, & US equity traders have been bored out of their skulls with the virtually nonexistent markets, those that have been following the FX markets have made some spectacular gains this year, even in the traditional volatile December period in FX markets, true to form has not let us down.
So if you actually looking for markets that move, I would strongly suggest moving over the forex markets, or at least having that as an option.
FX markets are regularly putting in 100-150 pips swings and showing some clean patterns, which is where members have been focusing on; to look for the high reward/risk setups, not watching paint dry trading the ES.
USD/CAD vs SPX
I have showed this chart before, and it's a great chart, it's been a key component of mine for the past few years.
If traders and particularly the bears understood the message that this chart tells you, they could have saved themselves a whole lot of pain, by calling crash every month, when key components of the "risk" trade were telling a totally different message. I guess bearish traders only see what they want to see.
Likewise bullish traders may indeed ignoring the message that is potentially being suggested here.
Now we have a setup that members are aware of that could be finally telling us some big is about to happen early next year, members have an idea that we want to be taking to the market early next year.
If I am right about this idea, then we are setting up for the suspected reversal in stocks and general "risk" buying.
If not, we will just chuck it away and move on to the next idea, as we have done for months, this is how we do it at WPT.
We don't marry an idea, if it's not working we simply chuck it away and look for a new one.
Most of my ideas so far have really come in the FX arena, and some of the swings we have seen lately have been amazing, currently we have some great looking setups on the GBP/USD and EUR/USD crosses.
The EUR is taking it on the chin atm, as is the GBP, but by using themes with the crosses of the selected currencies, we have been trading some great moves this December.
So if you looking to get away from equities, or even add other markets to you arsenal, take at look at the site.
I can only show a small part of what we do in these pages as it's not really fair to subscribers.
If you looking for quality analysis from someone that actually looks at multiple charts and works hard at providing members information to stay on the right side of the trends and making $$$, why not give the site a trial.
Until next time.
Have a profitable week ahead.
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