I want to be positive on posting what I am going to post. If people are going to ignore the technicals then you're going to get crushed trading. Fundamentals and a host of other factors are great for buy and hold forever investing, but NOT nearly as relevant to short term technicals when trading.

We spoke to the macro technical wave. These waves have been showing a rising wedge but catching the exact top is impossible. Yet post after post was given about the potential wave top represented now as it looks to have begun yesterday.

The thing I want to stress is that if a wave was going to happen the markets were clearly approaching the top of that channel. This is why I was posting hedges, exits and stops. When trading you can't afford to sit and see if a macro technical becomes confirmed because the initial drop is brutal to recent positions.

Either place a strong hedge (frankly only if profits in the trade you entered are enough to cover the hedge) or get out.

If we want to talk investing versus trading we can do so but this thread became a trading thread and trading means planned entry, strategy for exit or hedging around strict discipline.

Ok, enough of that. Here is the channel we've been trading. Taking new positions above the mid-line would be higher risk than taking positions around the lower channel. This means stops should be tighter. I also mentioned buying Puts, some hedge and others just straight Puts. There is nothing more enjoyable than buying a Put like TWTR and having it come all the way into the money. Complete and total risk free strategies are presented when those cheap options pay off.

You can do the same looking at waves for a specific stock, if the lower wave projection strikes are low cost. I generally never pay over 15 cents ($15/option) for this strategy. But I only need 20% of them to hit for it to be a solid strategy. And occassionally I get a gift of some kind of bad news that sends shares tanking. I'd even be happy breaking even on some of the waves because its all about using the market tools available to present lower risk opportunities.

So Monday will be a key day in wave analysis. We could have a throw away day trading higher but not breaking Friday's high. Don't be fooled if that happens. If it develops that way then you get an opportunity to reduce exposure and get some hedges in place. Tuesday would become the pivot day. I believe you'll see a clear break back down on volume. We would need to see a new high to keep any talk of breaking these waves.