c505218304b50c59c3659f6dda43bae7-links-0–>In Thursday’s post: Thursday, 5/26/16 Consolidation near highs, Possible Extension? – I noted:
“What follows next may either be a series of i-ii’s up (as long as 2087 holds as support) — or a wave 3 through the overnight session.”
Between these two possibilities I suggested -we did not immediately have the wave 3 up over night — instead, we had a series of i-ii’s — or you can also think of them as a-b’s.
That’s what happens when you have the setup for a 3rd up — but then it fails and just coils a lot. We’ll explain this more in detail in the upcoming members-only video.
We spent more than 48 hours coiling until the last hour of trading on Friday when the market finally moved higher with conviction.
During the day on Friday, all indices made new highs, but there wasn’t much conviction. It looked like there was a potential for the market to just fall out of this rising wedge and crash hard — especially after rising so far and so fast without much of a retrace.
But that last hour of trading and the after-hours reaction was a sign of what is to come.
Look at how much time we spent coiling in an upward channel. Some might see that as a wedge that would drop upon break of the rising channel — and there was potential for that when Yellen (the Fed) opened her mouth at 2pm on Friday.
But what happened in the last hour of trading was very important in terms of setting the tone for next week.
I’ll be reviewing this in detail for our members only video.
The 4-5 week long correction that we just went through (was so painful with the choppiness) – might be either wave 4 or wave 2.
So what we are in now is either a 5th wave up — or potentially — even a 3rd wave up. But always better to pick the more conservative pattern to work with.
As you know from Wednesday, 5/25/16 – Took $1,200 gain on Nasdaq Overnight Trade, we exited our bullish Nasdaq trade at 4463.5 from our entry at 4405.
But, geez — this market kept roaring higher — which is why I thought this graphic would be appropriate.
Nasdaq Prediction As I have been saying for some time, there is a lot of support just below 4300 in the Nasdaq — and that drop could have been the bottom of wave II in an ending diagonal. What I did not expect was for the drawn-out B-wave to bring us back down below 4300 in super choppy fashion before the uptrend resumed. But when it did resume, damn, it really kicked off.
And from the looks of it so far — what I was suspecting — a wave III up — is now looking more and more like a reality. While we caught a good portion of this up move, would be nice if we had the conviction to hold on to what appears to be an extended-3rd wave at this point.
This was my prediction few weeks ago – you can compare what actually happened with what I was thinking at the time. The first few twist and turns were actually spot on within 1 point. After that, those first 4 twists and turns, what followed next was different than what I had anticipated.
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