Bear Market Trading Framework

The weekly setup.

All EMAs are HL2s. The image shows the market going into bear mode upon 3 weekly closes were made below the 59 EMA. As you can see from then on the 21EMA proved to be a good short entry.

The quarter lines are generated from the last week’s data: they are a 15%-50% extra added on both sides relative to last week. If the 50% range gets exceeded, that is called a push and there is a palm representing this. I push out the start of the histogram to the terminal point.

As you can see, after the settled push, you also have a low risk entry in the blue circles, with a possible total of 9, 22 and 32 pips draw down if you buy at the opening price.


     AxelU[i]=(High[i+1]-Low[i+1])/100*15+High[i+1];
     AxelHU[i]=(High[i+1]-Low[i+1])/2+High[i+1];
     AxelU1[i]=(High[i+1]-Low[i+1])/2+Low[i+1];
     AxelL[i]=Low[i+1]-(High[i+1]-Low[i+1])/100*15;
     AxelHL[i]=Low[i+1]-(High[i+1]-Low[i+1])/2;

if (iStochastic(symbol,0,18,3,3,MODE_SMA,1,MODE_MAIN,i)<25 && iStochastic(symbol,0,18,3,3,MODE_SMA,1,MODE_MAIN,i+1)<25 && iStochastic(symbol,0,18,3,3,MODE_SMA,1,MODE_MAIN,i+2)<25 && iMA(symbol,0,21,0,MODE_EMA, PRICE_MEDIAN,i)>AxelU[i]){
         HighBuffer[i]=iMA(symbol,0,21,0,MODE_EMA, PRICE_MEDIAN,i);
         LowBuffer[i]=AxelHU[i];
      }
      else {
         HighBuffer[i]=AxelHU[i];
         LowBuffer[i]=AxelU[i];
      }
      
      
          if (iStochastic(symbol,0,18,3,3,MODE_SMA,1,MODE_MAIN,i)>75 && iStochastic(symbol,0,18,3,3,MODE_SMA,1,MODE_MAIN,i+1)>75 && iStochastic(symbol,0,18,3,3,MODE_SMA,1,MODE_MAIN,i+2)>75 && iMA(symbol,0,21,0,MODE_EMA, PRICE_MEDIAN,i)<AxelL[i]){
         HighBuffer2[i]=AxelHL[i];
         LowBuffer2[i]=iMA(symbol,0,21,0,MODE_EMA, PRICE_MEDIAN,i);
      }
      else {
         HighBuffer2[i]=AxelL[i];
         LowBuffer2[i]=AxelHL[i];
      }

The blue lines are the 14-sample Window envelopes, they are sort of a “Target 1”.

The color coded hands… Magenta mean that the market closed outside the window envelope. Usually there is follow through to that. There is also a white palm (white lie when the hand does not make an 8-sample lower low/higher high), but not here.

The must hedge / re-hedge entries are 70 pips beyond the push terminal.

I would consider 50 below the push point to be TGT2.

Last week’s pivot can also prove to be a good entry.

Now, let’s talk Salvatore Daily.

June was not a bear market – yet.

There was a God Day 1, a crossing that you don’t fade until Day 3.

The 18-sample stochastic becomes very important here.

The optimal entry in the Bear market was a Cover high (a day that is a 4-sample higher high closing down by 27+ pips) with the stochastic K above 80 (red C).

During the transition period, an overbought K and a C on the day or before was a very good entry.

The exit during the transition was below a fresh C print scale out in the next 60 pips watching the reversal divergence get more pronounced.

The Lime C-s also worked the same way, they are not fully ripe ones, but two had enough vitamin-C.

Ever since the world begun (the Rear Market) there have been mostly corrective waves.

The difference between the corrective wave and the impulsive is that the corrective one makes its high / low with optimal strength versus the impulsive one goes into excess and has to correct back with a divergence. Feel free to fry all of your E.W. knowledge.

Everyone has screwed up the wave count, particularly the ET EWs.

The orange ABC was a Wave 4. It made a lower low than Wave 3, yes.

Ok. Back to business.

Wave 3 ended with the impulsive divergence I’ve been talking about, under the under cooked C with a total of 80 pips.

Any move back to Murena (E44) was a prime sell during the heat-wave.

The following ABC took 2 full months to play out. Every wave ended with a Cover C and optimal strength.

The last thing to talk about is the Must entries, these are the moratorium numbers under / above the C-s at 27 or 30 pips. Two more pips and you have no more excuses not to take on a full hedge or a venture short.

To play these, aim for 150 pips from your entry and trail. Code 11 would be my choice after 20+ pips in gains.

Are we gonna get a lower low come next week? I think this Wave 5 has a corrective structure, and the stoch K isn’t gonna touch the 4.8 made by Wave 4, the settled value was 9.6 and intra day the lowest print I saw was 6.5 – I would call it satisfactory. It all depends on how the market would open. Some gap up would certainly decrease the chance of a beat.

Raw was my 7th book written in Hungarian, released it in 1997.

Back in the Summer of 59: the Baer Market entry did not work when price opened back up above the E-59, and transformed into a Bulk Market in 3 weeks & started riding the Envelope up.

The second envelope I placed at 3.5x

After Magenta push beyond the Window Envelope, Wave 3 mustered 105 extra pips beyond next week’s open,
Wave 5 managed 98

Not entirely sure where the 100 comes from, but 3x fluctuation size is 96. I guess I know where Target 4 is then If you are curious, the Stoch was at 4.9 at its lowest. Strange? Not really. Same thing with the 67 momentum. Just about matched the prior reading with price 300 pips lower. This is the very definition of reversal divergence.