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Another very strong day in the market, with the DOW up 193 points (1.22%) and the Nasdaq up 43 points (+1.03%).
As discussed in our weekly forecast, this stock market rally follow through (over the last two days) makes one of our two scenarios obsolete. Particularly, our most likely scenario of the Dow Jones reaching 15,071 by February XXXX, before turning around and bouncing is no longer in play. Which shifts us to the secondary scenario. The bounce that is happening right now.
This bounce is an incredibly important move for the DOW in both price and time. Even though the move started earlier than anticipated, it is incredibly important for the structure of the market and our Bear Market Thesis. Remember, secondary and lower high in March of 2014 is a must before any structurally sound bear market can resume.
How long will this bounce take and how far will it go?
We have a number of things to consider. First, the last down leg on the Dow Jones left a bunch large open holes going all the way up to 16,400. It would be ideal for the market to close the gaps before rolling over and starting the next bear leg. Further, a move into the 16,400 by March of 2014 would allow us to liquidate the remainder of our long positions at fairly good prices and get us ready for taking a short position for the remainder of the bear market.
With that said, February XXXX remains an important turning point in the market. Given today’s market action I believe that this turning point will be a halfway point of the bounce and/or the B leg of the correction (if you are familiar with Elliot Wave). In other words, it is likely to be a turning point for a short correction that will retrace a % of the current rally without compromising the bounce. Thereafter, the Dow should bounce into the XXXX category by March to structurally complete the up move.
That is why a proper trading strategy we have executed so far is so important. While our work can determine exact turning points over the long term, it get a lot more complicated over the short term. As such, we must always wait for a technical confirmation before taking or reversing a position.
(***Please note, we have made a number of trades within our sample portfolios today. Please log in to your account to review the trades).
Short-Term Projections & Advice:
The next point of force shifted to February XXXX. A likely intermediary top before a correction of the rally from February 5th takes place. Thereafter, the market should….. (Would you like to see the exact points of force in both price and time? Plus, what you should do. Please Click Here to +Subscribe to our premium service above).
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Stock Market Update. InvestWithAlex.com February 11th, 2014 Google