Benedict Chen

Looks like I had to make adjustments on the trade.  I was up a significant amount, but looks like the market changed a bit and I had to adapt.  The thing with corrective waves is that there are around 13 different corrective patterns.  With the S&P500, triangles tend to form more often than any other corrective pattern.  The most lucrative patterns tend to be the more rare A-B-C Flat corrective waves, as they are extremely precise.  With triangles like this, its still profitable, but less so since the trajectory is harder to pin down and the time involved is rough.

I had to exit a previous trade because it became clear that the next move was unpredictable.  I stomached a significant loss, but was able to recover 3 to 1.  Currently, the move is at the top of the triangle and will likely spring upwards as the MACD is implying upwards momentum.  Whichever way the move swings, I can profit from it.

Okay folks…

After a long hiatus, I’m back in action.  I guess it’s been almost a year since I’ve posted here.  Life has been a series of unexpected events, much like the markets.  Of course, you cannot control what happens next, only how you react to it.  Luckily, I’m back on my feet and working hard again.

What we have here is a very standard range play.  It’s still bouncing up and down, going to hit the top of the range and back down again.  It’s a comfortable play for me to get my feet wet again.

I want to thank the people in the past month who have contributed to my growth.  I will always remember the experience and how it has fostered the next step in my personal development.

Wave 1 of 1 - Downtrend

It appears that a Wave 1 of 1 has appeared and the move is pivoting downward.  I entered at Wave 2 and am currently short.  I entered at 1177.00.

Today is the New Moon.

New Moon at 0% of Full

I found it particularly interesting that sometimes things can coincide.

The correction for Wave 2 is today.  I am expecting to see the trend resume soon after this.  We only have a couple more days to go and I am curious as to how this will play out.

• Last Quarter – September 1, 17:22
• New Moon – September 8, 10:30
• First Quarter – September 15, 05:50
• Full Moon – September 23, 09:1

For some odd reason my stop-loss disappeared and I wasn’t stopped out when the market rose 14.41 points on Friday’s close of the market.  The market reopened Sunday night at 6pm, so I am adjusting my trade.

New Stop Loss: 1115

New Price Target: 1025

Total Account Risk: 3.33%

I’m expecting an 80 point drop soon, but unsure of the exact date.

Retracement hits 76.8%

Based on the Zig-Zag correction, which subdivided into an expanding triangle when viewed up close on an intra-day chart, the market (if it stops here and falls) will likely move 80 points to hit 1025.

Exppanding Triangle hits Top of Range

The expanding triangle hit the top of the range.  Originally, I thought it would’ve stopped at the other location and fall short of the trendline I drew since the Gann date was September 3 until the 10th.  On the day of the 3rd, a steep rally hit the market rallied 14.41 points, but failed to stop me out for whatever reason.  My orders subsequently disappeared and my position is still open.  Ideally, it should stop me out quickly so I could re-enter the market after the gain and readjust the position.  Either way, I’ve adjusted my position accordingly and readjusted my trade.  I’m short 15 contracts at the moment, after adding 5 contracts in light of this new pattern.  The risk is on the high end, at 3.33%…but this is a trade that can substantially increase my account by about 12.5%. The risk-reward is almost 1:4 in this case and I think based on the current trend of the market and timing of everything in place, it’s a good trade.

Looks like the 3rd wasn’t the date of the drop and I could still be wrong.  Luckily I use stop losses and if indeed I am wrong, I shouldn’t sacrifice any more than 2.5%.  The Gann date specifies the 3rd until the 10th.  Unfortunately it doesn’t specify up or down.

Monday will be the real test to see if we’re correct or not.  The 14 point rally was quite a shock and we’ll see what happens from here.

The Gann Date calls for tomorrow and if the estimates are accurate, the prices will tag around the 1093-1095 region before dropping significantly until ultimately a 80 point drop which won’t happen all at once.  Perhaps in one go it will likely drop to about around 50-60 points first.  A good price target first would likely be around the 1055 area first but ultimately hit around the 1013-1015 range.

9/3/2010 Gann Date (Click to Enlarge)

August 5-8, then August 14-20

September 3-10, then 21-28  <—-Let’s see what happens [Edit September 27th in Japan: Breakout Upward on the 3rd and then Drop Occurred on the 21st. ]

October 7 to 14, then 21-30 <–

November 5-10, then 20-30

December 3-10, then 15-24

From 1053 to 1070. Quite a move.

Next big move poised to begin soon.

The market has been caught in an expanding triangle with the E-Wave finishing just now and helped me exit at 1070 with a Stop-Limit order.  I opted not to go for 1075 just to be safe, but that would have given me an extra 5 points.  I went from 1053 to 1070, so I’m quite satisfied already with the 17 points that I achieved from an easy pattern.  The next pattern will be more difficult to predict the exact termination point, but it will be a great move and a tremendous downturn.

If my Gann dates are correct, it should begin sometime in the afternoon tomorrow or on the 3rd.   The exact Gann date is actually September 3rd, but the previous prediction happened to be early by one day and I was a too late and missed the beginning of a tremendous drop.  I still was able to make a huge trade, but it would have been that much more sweet.

Bought at 1075 and Exited at 1045: 30 Point Profit

The S&P500 hit 1045 today and my  Limit Order was triggered to exit a position I entered on the 19th (5 days ago).  The profit was 30 points, the trade being from 1075 and exit was 1045 to complete a Wave-C correction (zig-zag type) that was the same length in size as Wave-A.  This seems to be a high probability strategy with the rewards greatly outsizing the risk in proportion.

Gann Date: August 20. C Wave to Begin and hit 1045.

It appears that the trend has already begun to change from the “zig-zag” B-Wave to begin the C Wave in the markets.

If my estimates are correct, we’re looking for this to terminate at about 1045.

It appears that both the Nasdaq and the S&P500 are closely related in terms of price movement with little variation.  No surprise there as the S&P500 covers about 75% of all publicly traded companies in the United States.

Gann Dates for the NASDAQ for April 23, 2010 High

July 24, October, 23, January 23, August 23, Dec 23, September 16, November 29.