Yes, it's a game of "buy support and sell resistance positioning yourself on the short side", until further notice.

We are on the support then. I sold a half of my SKF position, which I bought at close yesterday for a profit. I will buy it again on a bounce. The fast stochastic 5,3,3has closed at a buy signal today, so I am not risking too much here.

rp, Thanks. I saw it after I'd posted my request. So for XLF 9.12 is resistance and 8.68 is support, which gives a trading range. -junkie

rp, I concur with your hunch. Yesterday at the close the PPT gave us a gift of a safe entry into SKF and SRS. I will lighten up on yesterday's highs if we get there.  I suspect we could see a move up during the last trading hour again, a chance to reenter on the short side after taking profits earlier in the day.

The 5,3,3 stochastic is for swing trading, not for day trading. If you buy at oversold and sell and overbought, you are likely to make gains. The stops should be wide enough to accommodate the swings.

Good! And rule 11: if in doubt, use the 5,3 stochastic to position your trade.

He is referring to big guys with a lot of money in their hands, who could move the market the way they want it. And he is being correct! You, and I and even all of us at this site do not matter a zilch for this market.

The chances of breaking down from the 770 to 970 range are small, so with 6 out 7 chances  (or something on this order) one's profits will not materialize if one expects a market breakdown and a fallout from this range.

Thank you, dodger; it has certainly played out. In addition to the positive divergence, you mentioned in your last night's update.

rp, Yes, Fidelity traders could not access their accounts during a few of market crashes. One of them was in February 2007. It has been reported in the press.

I am sorry to hear of your losses, I hope you could ride through them till your account turns positive again! Good luck!

Yes, One needs to play this market with the old rule "buy low and sell high", without expecting any breakdown to the downside. And take profit as they come along. Today we saw high on ultra shorts, and now SKF is low. It could move down to 120 or up to 150. Roll a die. SRS is not low any more, it will be below 50.

Take profits as they come along and buy again to reduce your costs. This is the strategy I am trying to follow. Good luck!

My guess is up for a couple of days. The market is becoming oversold

<5,3 stoch

You are right. I can see the same too. Ameritrade must have fixed it.

Thank you both for your comments. According the Steve's update last night, the market is still oversold on the 30-minute interval (based on the slow stochastic, as I remember it). Wave 5 of 1 of 3 of 5 may be concluding now with a bounce to come, IMO.

I too noticed that Matt's system uses simple MA instead of exponential MA. Simple moving averages are more lagging, which is probably what's needed for something as fickle as XLF. If there is any other rational behind choosing simple moving averages, I would like to know that.

Steve101, I would not analyse the ultra ETFs, yet the indexfor SMN is does exhibit the H&S pattern with the neckline in the middle of 130s. For what it's worth.

So big arabic numerals (1,2) used on Matt's chart yesterday and today signified subwaves of 3 of 5? He uses (A) for the primary waves, and capital letters for subwaves of primary waves, such as 3 of 5, IMO.

Do you get stable alerts with the formulas, as you posted them? I don't get alerts even though the formulas have been entered. I am not using any strategy, by the way. I am using version 3.0. I tried upgrading to the latest 3.1 this morning, and began to see the program crash within minutes of a restart. I had to uninstall the update, delete the registry keys and run the installer for 3.0.

Let me know your set-up, if it's different. Thanks for your help!

What value do you use for X%? Also, what is your time frame that constitutes a "swing"?

I am totally confused with his labeling of the waves on the <a href="http://breakpointtrades.com/file.php?id=5001">chart</a> that he posted.

I am seeing 5 waves down, like Matt alludes. I am also seeing 5 waves up within the rising wedge. I am confused as to what the market's secondary trend is (the primary is obviously down), based on that <a href="http://breakpointtrades.com/file.php?id=5001">chart</a> .

If move down looks impulsive -- like the one shown here -- and has 5 waves, it is wave 1, 3, or 5 down (if the secondary trend is down), or it is wave 2 or 4 down (if the secondary trend is up). Matt labeled the move as wave 3 of 5, so he must have meant that November lows were only at the end of wave 3 then (I am trying to figure out his assumption implied in his labeling). This would give a bearish interpretation of his chart, and one should be positioned short then. Is there any bullish scenario, where one could have wave 3 of 5 (I cannot think of any)?

Next, what do big 1 and 2 inside the wedge mean, and how were they derived?

Lastly, a move that exceeds the 61% retracement of the preceeding move cannot be corrective. Is this true or false, or it depends? We closed today below 830, and 61% retracement was at 840.

Comments are welcome. Thanks in advance!

PS Matt's later posts provided more insight, however I did not have them at the time. So any solution must be based only on the data in this posting, please.