Tuesday, December 17, 2013

DJIA Trade: From Short to Long!

Here's the new, possible, setup:

In my first post of this series I was looking for a sell-off, which played out nicely, to setup a long Santa Clause / New Year rally.  Here's the post from 12/10 in it's entirety... "A possible sell-off is setting up before the year end (Santa Clause), and then new year rally.  We have a clear 5 waves up with what seems to be the a and b of a zigzag correction.  The a and b could also be a 1 and 2 but I don't foresee that much of a sell-off going into what is traditionally the most bullish time of the year.  We could even have a truncated zigzag with and aggressive rally out of it well into new highs."  We didn't get the truncated zigzag -- which was a low probability, but was worth mentioning -- but everything else came to fruition and now it's time for the second half of the prediction: the rally.  It all obviously rests on the FOMC decision tomorrow but the setup is perfect for the rally and it seems as though the market is telling us that there will be no taper tomorrow allowing for the rally to new highs into the new year before a significant pullback in the spring.  I think we are in store for a pullback of at least 10% that could last into the summer of 2014 but it will fuel the new rally that will have us making new highs at the end of 2014 -- time will tell.

-- HollywoodTrader

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