Nov 28, 2017

Update

It is not an ED it is a simple impulse... RSI says this is wave 3 there should be one more move lower and higher. NYSE,DJ,RUT have the same pattern.
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18 comments:

  1. JulesNov 28, 2017, 9:48:00 PM

    Krasi...looks better! Thats why i pointed out that RUT didnt fit ED couple days ago! We might have nested 1-2 here....so we could push higher on RUT: 1560/80 not out of the picture at this point.
    --Jules

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    1. KrasiNov 29, 2017, 5:59:00 AM

      Yes, RUT was obvious nested 1-2 i-ii, but RUT has a different pattern for almost a year and short term it was very strong in iii of 3 already when DJ and SP were doing nothing. How should I decide when RUT and SPX have the same pattern and when not?

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    2. AnonymousNov 29, 2017, 6:13:00 AM

      Krasi, this is Jules! I agree with you the counts have been out of sync and extremely hard tis past year! I think if people listened to you and what u keep repeating it wouldn’t matter wether impulse or ED! I think most young traders try to pick tops/bottoms and that’s futile! One thing EW and your analysis has thought is where to join the trend and when to take profit...thx buddy! I owe you a lot!

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    3. KrasiNov 29, 2017, 7:17:00 AM

      Usually when I watch different indexes I compare them for example DAX/SPX/RUT they had the same pattern for years, but in the last one year they have different patterns.
      From long term perspective it is the same, but intermediate term it is different.
      That is why I compare the big picture for important top and such moves for a few weeks every index on its own.
      I concentrate on intermediate term or longer moves and for this time frame it really does not matter ED or impulse in both cases waves 4 and 5 still needed. How this will happen is important only for swing or day trading.

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  2. John DoeNov 29, 2017, 5:31:00 AM

    Hi Krasi, What is the move you make based on today's update that this is a simple wave 3 impulse? I'm just trying to learn how to interpret your good senses and the information you provide e.g., today SPY, hypothetically, would you now a) cover a short because you should never guess the end of a wave 3? b) initiate/or double up on a long for the same reason... on top of what you've been recently stressing: 'the high will be tested'n(no point in shorting/guessing a high)? or stay neutral waiting for a shorting opportunity? all hypothetical questions, I'm just trying to appreciate how to better control risk and interpret your updates. I appreciate and respect all your work...thank you! John

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    1. AnonymousNov 29, 2017, 6:41:00 AM

      John...im not match to Krasi and im sure he will respond soon!
      2. He was simply pointing out that the target might be higher than if it was an ED as ED tends to be choppier and have less energy
      3. As far how to trade it, my advice is to go back to last week recap and see his trading methodology which i have benefited from a lot
      A. My 10+ years in the markets has shown me that most new traders want to predict tops/bottoms and they dont have a plan to deal with the losses
      B. So first decide what kind of system do you want to trade: follow trend? Counter trend? Etc...
      C. Then layer your entries. Divide your trading capital and add if you r right and scrap if you reach your exit point.
      For example: i trade credit spreads...i entered 1/3 long when we corrected last week and a doji at a support level! I added another 1/3 on Black Friday when we reach the next fibblevel! Now im looking to take profit as the heart of the move is approaching its end

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    2. KrasiNov 29, 2017, 9:41:00 AM

      I feel some confusion in your question and the problem is the time frame... in my trading context your questions does not make a lot of sense. You should decide which time frame you want to trade then you will have the answer of your questions.
      a) I would not be short in the first place because the move is up. Even in swing/day trade you should trade only in the direction of the move and definitely not the expectation of some choppy wave 4 of ED against the trend.
      b) too late for a long probably the top of wave 3 with RSI at 80
      My time frame is intermediate term this means I am neutral.

      So the answer is - it depends on the time frame which you trade and the tools which you trade.
      - swing/day trade after a spike you take your profits and wait for a pullback.
      - intermediate term - do nothing or take some profits 1/3 for example only because the indexes are close to important top. The time for long was when I have warned for a low. Now it is too late for long and too early for shorts.
      - long term - not interesting at all.


      For years I was trying to be short term trader with zero success:) Two years ago I switched to intermediate term time frame and suddenly it works perfect:)
      Examples:
      - in September I said higher and at least two more highs... since then the wave has extended and the pullbacks were short living. Short term wrong, intermediate term it does not matter up is up and waiting for the move to be finished
      - this wave from 15.November - it was weak with several different options I have picked the wrong one ED. Short term wrong, intermediate term it does not matter we still need wave 4 and 5 for a finished pattern so it is the same for me.
      Now you can see why I switched to intermediate term and it does not matter for me if it will spike for w3 or it will be w3 of ED.

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    3. John DoeNov 29, 2017, 8:05:00 PM

      Very helpful thank you for clarifying Krasi. I only ask because I wasn't sure what you put more weight on in the analysis between the charts, levels, etc...it seems like it is easy to get a count wrong with EW so sometimes I tend to lose patience and short too soon. Do you have any thoughts on SOXX here?

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    4. John DoeNov 30, 2017, 3:30:00 AM

      Thank you to the other responder as well. Which credit spreads to you trade specifically?

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    5. JulesNov 30, 2017, 6:20:00 AM

      Hi John...i trade vertical/butterfly spreads on the SPX, RUT depending on the EW count and cycles. When we are in chop...which often occurs in wave4, i use the butterflies as they give EXCELLENT time decay! I told Krasi, I would put together a presentation/tutorial on the way i do it but it's taking time...have young kids :-)
      In a nutshell
      The idea is to use options to capture 2 moves : the thrust of a wave3 (done with a vertical spread....you can use anything that is directional) and the wandering of wave4 with a high theta strategy (fly or low range condors).
      its been a more relaxed & profitable way to trade this mess... :-)

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    6. KrasiNov 30, 2017, 10:53:00 AM

      Probably most of thee readers are confused I am talking 90% of the time about the hourly chart because the daily/weekly change seldom. This leaves the impression that the analysis is changing often, but in fact I put weight on the daily/weekly and I do not care about the hourly chart.

      SOXX either a of 4 from the July low(bullish) or triangle finished on 21.8 reversed already(bearish).
      I have looked at the top 10 components and the first five with weight ~40% look like w4 and the second five with ~20% look like reversal:))) "Heavier" components say one more high for the index.

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    7. John DoeDec 1, 2017, 5:15:00 AM

      That's great thank you Krasi, I appreciate the clarity. you call the hourly very well when you say 'this is a top' - so I need to focus on your intermediate/lt analysis, and will not read into the weekend short term analysis as much (unless it is a midweek update with conviction like today :)). As for the divergence you are seeing the last few days in tech, VIX and emerging markets my only observation is that there's been a big rotation happening into the 'biggest' beneficiaries of U.S. tax reform - i.e., the highest taxed sectors (supposedly financials ,transports, etc) and out of the sectors with the lowest effective U.S. tax rates (e.g., Tech). My read here is that cash levels must be very low at the moment if such a rotation can create such a big crash in the sectors used to fund these trades...running out of dip buyers!

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    8. AnonymousDec 5, 2017, 2:41:00 AM

      SOXX - good pt July low look like a perfect 2 with 61.8% retrace from April-June and today look like a perfect 4 from November high (38.2% retrace) - does TA corroborate here? thank you

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    9. KrasiDec 5, 2017, 8:52:00 AM

      Very often there is Fibonacci relations between the waves. I think this was wave 4 with 23,6% Fibo retracement which is common after extended wave 3.

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  3. AnonymousNov 29, 2017, 6:13:00 AM

    Hi Krasi, what do u think about gold silver and miners.....they all seem to be moving in different directions with gold holding up a lot better but not able to break off 1300 convincingly really worried me

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    1. KrasiNov 29, 2017, 8:34:00 AM

      PM/miners are heading lower into year end as the cycles suggested a few months ago. After a bottom we should see something higher for a few months, but I do not think this is a major low just correction higher. I suspect PM will turn higher when the stocks turn lower.

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  4. AnonymousNov 30, 2017, 5:26:00 PM

    Do you think XBI/IBB would begin retracement higher to 85 or more? Thanks. It seems the SPX is too bullish to see the wave 4... Thanks.

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    1. KrasiNov 30, 2017, 6:19:00 PM

      This is the top of wave 3 from the mid November low for SPX and the big gains are behind us.
      XBI/IBB are retracing higher for three weeks already with some corrective pattern... XBI does not look like it will reach 85.... what bothers me is IBB looks like impulse lower and XBI like three waves, so I am not sure what exactly is going on.

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