I analyze macroeconomic issues from a fundamental perspective, and I analyze market behavior from a technical perspective. Original macroeconomic analysis can be found here and both macro analysis and commentary can be found on my Caps blog. If you like or appreciate my analysis, please add yourself to my Following List

Wednesday, February 3, 2010

Spinach Frittata

I am continuing with the count that I have been showing since Friday
- Captain Crunch - Friday
- Update on the ES Count / Pattern - Monday
- Omelette au Fromage - Tuesday

I think we are still in Minor 2. Now there are two main options
1) My preferred: The move yesterday was the A leg of Minor 2
2) Alternate: The move yesterday was the C leg of an Expanded Flat that started in the middle of last week.

I think my preferred count is the most likely count, but like I have said many times in the past, EW and TA is not about being "right", it is a tool to help you evaluate risk and to evaluate *possible or likely* moves (when is a good time to take partial or full profits, when is a good time to hedge, when is a good time to cut a losing position, etc.) So even though I think Minor 2 will continue, we are at the juncture of a Minute Wave structure. If the next move is choppy / sideways then we have a B wave. And if it is impulsive down, then it is likely to be the start of Minor 3.

So what I did yesterday was to exit out of my long positions (for a small profit) and established some pilot shorts. I will wait to see how the next Minute Wave develops to see if add to shorts or if I will hedge longs to play the C wave.

Again, both count options are viable. And, despite what anybody tells you, *NOBODY* _knows_ the future or can use EW to predict what will happen next with absolute certainty. For me, this juncture here suggests a mindset like I outline above is the prudent course of action (for a short term swing trading perspective. Longer term position traders will have a different mindset, see my conversation with hindawg - http://marketthoughtsandanalysis.blogspot.com/2010/01/captain-crunch.html#comment-32099940).

If you are interested in seeing how I play these Minor/Minute Waves, please see here (read *all* the notes first around the portfolios) - Positions/Portfolios

Here is my current count

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