My Current Trading Strategy & Position – Twenty-Sixth in Series

the Hi Everyone,

Here is my strategy and position on Aug 20, 2016:

Our Market Trend Estimation & Trading Proposal For Last Week (See my previous blog on Aug 13/2016):

“we believe S&P 500 might continuously rise to new height next week, and the coming rise might last a longer time. Hence, we might still hold our current long position until both the short-term uptrend band at that time and the second closest supporting line broken down confirmed.”

“The kind of position that we might place the order on is based on the current market trend – long in uptrend or short in downtrend. Position changes only if trend changed. We might not trade based on daily trend but on trend of longer term.”

Market Actual Movement (see attached 5 minutes & daily k-line graphs):                

S&P 500 reached new all-time height of 2193.81 on Monday morning. S&P 500 pulled back from Monday afternoon to Wednesday morning and reached lowest point of 2168.50 on Wednesday. S&P 500 broke down the old Uptrend Band on Tuesday, followed the new Short-Term Downtrend Band from Tuesday to Wednesday morning, and then bounced up quickly back to the normal Flat Zone on Wednesday. S&P 500 has been moving in a tapered region limited by red Downtrend Resistance Line and green Uptrend Supporting Line in whole week, touched the supporting line on both Wednesday and Friday, and touched the resistance line on Monday, Thursday, and Friday.  S&P 500 closed the whole week at 2183.87 (see 5 minutes k-line graph).

S&P 500 continuously moved along two embedded green uptrend bands that one started from July 28, 2016 embedded inside another one started from Feb 11, 2016.  S&P 500 touched lower limit line of the shorter-term uptrend band on Wednesday, rose to centerline of the shorter-term uptrend band on Wednesday, and around the centerline on Thursday and Friday (see daily k-line graph).

Possible Trading Results:                       ---- Another Profit Week

Traders who follow my blog might have:

1. Closed the long position around 2185 (which was opened at 2156 on Aug 4/16) when S&P 500 failed to break up the Downtrend Resistance Line on Friday afternoon for making sure gaining the actual profit and reducing the possible loss risk, ended at 1.3% actual profit.
2. Opened new long position around 2172 on Wednesday when rose up from 2168 supporting line, and ended at 0.5% paper profit.

--- Hence, last week is our profit week again, twenty-fourth continuous profit week since I suggested trading position started at my second blog on Mar 5! We have made at least 35.1% profit (33.3% actual profit, 1.3% actual profit, and 0.5% paper profit) in last twenty-four weeks.

(Please note the profit we mentioned here is based on pure basic gain in each week that does not include fee, leverage, and compounding. If traders who follow my blog used leverage as I do, our actual profit is the pure basic gain multiplied by the leverage minus the fee then compounding them week after week. Congratulations to everyone who follow my trading through these blog series!)

Here are current market moving pattern and some trading considerations for making money in today’s market:

Current Market Moving Pattern & Possible Future Movements:

S&P 500 is in longer-term uptrend band and is continuously making one new height after another. In the shorter-term, S&P 500 is moving up-and-downs in a higher level. S&P 500’s current moving pattern is up, volatility, drop, then up to new height. S&P 500 is most likely close to the end of uptrend Elliott 3rd wave in longer-term and the end of uptrend Elliott 4th wave in short-term. We believe S&P 500 may continuously make one new record after another this year. However, S&P 500 might approach the time of pulling back for adjusting in the shorter term, and could decline to the lower limit line of the longer-term uptrend band on daily k-line graph.

Current Trading Consideration:  

We might open (more) short position each time when market drop from supporting level or when market reach resistance level in downtrend band (momentum). We might open long position only if market turns into uptrend as well as market exceed resistance level or when market drop to (or move to) supporting level in uptrend band (momentum).  

The kind of position that we might place the order on is based on the current market trend – long in uptrend or short in downtrend. Position changes only if trend changed. We might not trade based on daily trend but on trend of longer term.

Furthermore, timing is the key in surfing. Beside, we might invest around 0ne-fifth of total cash only so we might add more positions when necessary on hold position with no paper loss, and might turn partial of paper profit to actual profit when un-certainty rise like we did in last four weeks.

The Conclusion:

Based on new progresses last week, we believe S&P 500 might continuously rise up next week, and then pull back for adjusting. Hence, we might still hold our current long position until drop from top point confirmed. Only if market turn into new short-term downtrend band confirmed, we might open short position with stop loss at downtrend band upper limit being broken up. However, we do not recommend you stick onto a fixed strategy. We have to surf the wave by following its move. Moreover, wave changes, so do we.