The market over the last week has been on quite a roll...
Before making the decision to re-invest on the long side or taking advantage of this profit taking pattern to take additional shorts I will take a look to see where the key levels of the current market sit.
My market of choice is the S&P 500, as I trade E-Mini's during the day, and like to use Calls and Puts off of the SPY for my longer term trading.
We are coming off of a very nice Elliott Type Two Buy at the MOB where we hit 660.00, those of you in our mentoring program have seen us talk about that MOB level for some time now. We tested the MOB and the bounce gave us a nice buying opportunity for this last rally. The next test we have for this rally is both the False Bar Stochastic Sell that is setting up now along with a major Gann Level test. If you are long this market do not be afraid of the Selling opportunity setting up, this is normal behavior after a Type II Trade. What you do have to monitor is where are all the levels that could spell the end of this rally. Here are a few that I am monitoring.
First and foremost we have an Ellipse giving us a level of 781.00, if this rally weakens at this price this could spell trouble for the rally. In addition my Gann Box is also telling me the 780.00 level is key. Again, for those of you in our mentoring program these are the numbers I gave out last week as profit targets for the Type II trade. Since the Ellipse tool is using Gann, it is no surprise that they are within a few points of each other. For those of you who are intimidated by the Gann Box, the Ellipse provides a very easy way of interpreting Gann the way an experienced user can with the box.
If we can break through this level of 781.00 are next level of concern is 840.00 which is a 62% retracement of the previous Wave 5. If this level is eventually broken then my long term funds would find a place back into the market on the Bull Side. Both of these levels should be used for taking profits if you are long off of the Type II Buy.
If the market holds 781.00 or 840.00 and starts selling off again I may look to buy puts with a strike around 64.00 on the SPY as that is our next projected MOB low.
Ron Wheeler
Did you mean 760 instead of 660 ??
By the way, gooo call on the 780 !!!
Posted by: William Kahler | March 17, 2009 at 01:43 PM
Hi Ron,
Do you mind sharing where you drew the elipse and Gann Box from.
Thank you
Posted by: Barry Miller | March 17, 2009 at 04:01 PM
Hi Ron,
I should have explained that I get an elipse value of 7.86. How can there be a difference in values?
Posted by: Barry Miller | March 17, 2009 at 04:14 PM
What is the mentoring program? Is there a sign-up area?
Posted by: Gary Takacs | March 18, 2009 at 10:28 PM
Hello
The Mentoring is the live training we offer as part of the Aget software purchase. It covers specific topics that relate to AGET strategies, open Q & A, and overall market commentary. The cost for 3 month blocks of mentoring is 495.00
If you have any questions or would like to add mentoring to your account, I can be reached at 800-322-9170 or jwerthman@mail.esignal.com
Posted by: Jeff Werthman, eSignal | March 19, 2009 at 11:03 AM
The original Gann Box started on Nov 4, then was extended out as the market grew outside the margins of the initial box.
Posted by: ronwheeler | March 19, 2009 at 11:07 AM
The Ellipse is a dynamic indicator and the levels will change everyday with new prices just as Gann Levels do. So today the level could be 780, the next day with new data it could change to 782. Just as the Gann Levels increase and decrease with time, the Ellipse does as well.
Posted by: ronwheeler | March 19, 2009 at 11:10 AM