When the Trader is Ready, the Market Delivers?

At least that’s how goes the saying. But traders, it’s more like “when the trader is ready, the market delivers?

But, I’d like to start I did not personally know the man but I greatly admired him. In Washington is marked by a lack of principle, courage and accountability, John McCain stood head and shoulders above the pack. That he was a man of courage has been told and retold. But more important, I think, is the fact that he fought for what you believe in and took responsibility for decisions. The United States will miss him.

Let’s turn to the US indices.

Starting with the context where I determine the answer to the questions:

What is the trend of the Trader’s Timeframe? And, is it likely to continue or change?

I trade the 18-day swing (monthly trend) and so I start my analysis by looking at the impact on the Trader’s Timeframe Trendof:

• The yearly (12-monthly) trend, and
• The quarterly (13-weekly) trend.

In the charts below, the 12-monthly swings are in green; the 13-weekly swings are in black.

I have taken the snapshots from my trading journal.

1. The Ray Wave shows the S&P is in a Cycle and Supercycle Wave V. At the end of wave V, there will be a strong correction down that will be viewed, by most, as a bear market.
2. We see that there has been the declining volume in the minor up move (blue and red lines).
3. We also see momentum divergences between the minor up move and the MACD (blue oscillator with a red line).

Based on the above, I take the view that the 12-month the trend is up. But, it is likely to form a change in trend pattern.

The 13-week shows a similar picture. We see volume divergence; but note, there is no MACD price divergence. The 13-week structure shows a Ray Wave count that signals the end of the intermediate wave structure.

Let’s turn to the 18-day swing (monthly trend). Remember, this is my Trader’s Timeframe.

In the 18-day, we see a sideways structure at resistance.

In the 5-day, we see:

1. The momentum and volume divergence that we saw in the yearly trend.
2. We see the possibility of a Complex Horizontal Terminal pattern. This is a unique pattern that tells us that there will be a change in trend in the next higher timeframe – in this case, in the 18-day.

This completes the trend analysis. Despite the lack of momentum on the 13-week chart, I take the view that there is a high probability that we shall see a change in trend in the 18-day swing. Consequently, my strategy is to look for a zone, set up an entry.

The chart below provides the necessary information.

A bearish-conviction close below 2852 will trigger the Complex Horizontal Terminal. The pattern is valid so long as we don’t see a bullish-conviction close above the black line.

The alternative scenario is an upside breakout. I’ll need to see:

• An LCC
• WPC and
• Acceptance above the Maximum Extension (2876) and Black Line

(for definitions of the above see Nature of Trends in Google Books).

Should the upside breakout occur, I’ll look to buy the retest of the 4-day FTP (see chart above).