Friday, March 20, 2015

[USO] update

In the backlink I was all prepared to swoop on USO and related but I had to change my model due to new wave data.  The model expected an inclining double bottom as show below in the reproduced model from that post.  I did not believe that this would be "the" bottom but rather that the market would try to pull a whipsaw C of 4 upwards as shown.

However, a KEY point of this model is that it would be a B wave bottom forming an inclining double bottom.  So while I did "call" a bottom here, people that actually understand how this system works will know that every call is a "potential" call or a "likely" call and always subject to some kind of trigger that breaks the "call".  In this case, just one penny below the old low in late January would completely invalidate that model.

Invalidating the model is one thing.  That technique is best left to those who really know how to count waves.  Most frequent traders should focus more on not trading until the model is VALIDATED.  It's a completely different mindset than buying speculatively and then bailing if the count goes wrong.  First validation would have been a break back up into the falling wedge.


In any case, the shares fell below W3 and thus invalidated the inclining double bottom model.  I don't have time to post daily updates on everything for free but rest assured my local StrategyDesk triggers were tripped and I knew the a-b-c model had been invalidated.  In any case where I model USO to be right now is just finishing up 4 of 5. 

Note: my main concern with pink a being the whole retracement of w3 remains.  If this breaks above $17.50 without heading to a lower low than w3 shown below then that is the trigger to change the model back to the original model but instead of being a flat correction to the $22 range it will be an expanded flat.  The first sign that this is unfolding would be a break of that top rail near 4 which does not quickly reverse back downward (i.e. something more than just an "e of 4" throwover").  The first sign that wave 5 is unfolding would be a break of the lower rail of the HT for 4.

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