Trading with Waves Insight - 8/25/2013
What an amazing and UNexpected week! We knew there was still trouble in Egypt, we knew Tuesday was the Fibo Phi-mate turn date, we knew the FOMC minutes would be released, and we knew that late this week would be the Jackson Hole summit (with Bernanke ironically). Even with expectations like these we had the UNexpected Nasdaq flash freeze yesterday, and Ballmer announcing his departure from Microsoft (NASDAQ: MSFT) today. With UNexpected influences like these, our focus on understanding crowd behavior and how markets react to the UNexpected is even more important than ever. We've taken some profits this week for BOOMers and focused heavily on gaining a clear picture of the major indices. We attempted to catch a long in TF and got stopped out for a small loss, and we'll be looking for any opportunities in the next day or two to cover more shorts and put my long toe back in the water for a few percentage points of bounce. Meanwhile, we signaled hundreds of points in profits from shorts we covered in Ndx futures. Make no mistake, "things ARE different this time", or at least for the first time in 31 years, since our government moved from lowering rates out of the 1970′s yield peak, to the next plan; raising rates for at least the next 10 years. Once hedgies "recognize" this turn, they'll adjust their holdings to less stocks and less bonds, which means lower prices in both assets. You can get ahead of them, or await the damage they'll do to your portfolio after they're almost done, and you haven't.
The Dow is dragging others into a 5th wave decline, foreshadowing a lower close today/Monday, or at least lower lows than early this week. Then, and only then, the hurdles will be cleared for a multi-day/week rise, to retrace the impulsive, five wave decline from the early Aug. high to this low. 14,650 +/-100 is the minimum Dow target for wave v. Spx would be similar at 1625 +/-8.
DX off yesterday's high looks like wave 'a' down and wave 'b' up ending soon, then wave c down toward 81.20. Then, a bigger move toward 83 probable, 84.50 possible.
Metals still in sideways correction, then pops to 24.50 +/-.50 likely in silver (which has just begun today).
For the NDX we see 3135 as still possible if a small 5th pops back above the high of the day, but is not required. Unless 3140 is broken, the current labeling of an ABC for wave '2 up will be the lead count.
New Home sales were a shock MISS today, putting darkness over the "economic recovery" canard. Tbonds are flying! Stuff is happening fast, but within the realm of behavioral predictions allowed by EWT and our model, this is good. Today could get ugly. We'll keep BOOMers up to date in real time and will post key updates to twitter. If you want some insight into our activity during the week follow us on Stocktwits or Twitter.
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