DJIA: B wave reaction rally of ABC minor correction pause to ATH
Updated
Got a typical reactionary rally after breakdown from rising wedge. Price moves back to kiss TL then rejects into C leg. This is a minor shallow correction of perhaps ~3%; a pause on road to ultimate ATH.
Gaps to fill down to 2949 on SPX will be the best yardstick for pivot. Buy all-in when price fills that gap IMO. Donald will make some deal with China soon as he wants to get elected, and that draws near. Expect some development in mid-Dec as catalyst.
Market knows he will get re-elected, Dems have no competitive candidate in field, their prospects are amusing at best and impeachment is a farce.
This isn't investing advice! Trade at your own risk! GLTA!
Gaps to fill down to 2949 on SPX will be the best yardstick for pivot. Buy all-in when price fills that gap IMO. Donald will make some deal with China soon as he wants to get elected, and that draws near. Expect some development in mid-Dec as catalyst.
Market knows he will get re-elected, Dems have no competitive candidate in field, their prospects are amusing at best and impeachment is a farce.
This isn't investing advice! Trade at your own risk! GLTA!
Trade active
Double topped. Rollover imminent?!Note
Doubled down; let's see! Fibo time suggests pattern completion on./about 01/02 Dec...Note
Definite double top in place; added position hedging with short dailies. RSI is weak, the second top comes with less volume and fewer issues advancing, its ripe for correction.Trade active
Rolled my OTM long puts up to ATM strikes, giving up a week in time to get price parity. This is further leveraging the bets, as Dec expiration is only three weeks away!The Three Drives to Top are clearly evident in SPX chart from 28 Oct - 27 Nov...!
DJIA has relatively less gain with the double top on resistance; RSI has weakened and daily volume is nil at these prices.
Fibonacci time on the current Wyckoff UTAD is at 55 days on 11/27. Might have completed then, confirm in week of 2 Dec. An extended Fibo time cycle could go to 89 days, reaching to Monday 30 Dec. This would be extremely adverse to Dec contracts!
Note
Week 9 of the mad rally; crunch time. See if we get a minor correction; be prepared for disappointment if Trump makes peace in China!Trade closed: target reached
Closed out all positions at panic selling on Trump tweet. Might sell more but we got a bird in the hand, better to leave the others in the bushes IMO! Could press lower in Weds/Thurs trade, waiting to go long here- high risk as it might correct deeper.Trade active
Took new position in SPXL ETF covered call, just 200 shares and shorted 2 Dec $60 calls net debit 56.5. See if it gets a bounce; these don't expire! Not doing call option spread yet!Note
On retest of intraday low I picked up 5 bull sprads on DIA Jan strike 274C; short the 06 Dec 277.5 for net debit $5.15, let's see if it bounce. The VIX and UVXY are well off HOTD and there is not yet fear in this market, it's orderly selling.Note
Added 5 bull spreads on QQQ in the Jan 200 Call spread vs 6 Dec 202.5C for net debit $4.71.Note
RUT has bullish undertone, only off 9 pips, or .5%, less than other indexes; took a plunge on IWM in 10 bull spreads Jan 160C spread vs 6 Dec 161.5C for net debit $3.03. SPY contracts are bloody expensive, would be hard to win on htose so I keep just the SPXL ETF play on that index. LOL gone from calling tops to bottoms... really risky business! GLTA!Note
On daily 15m charts all major indexes are carving out lows and forming cup- probably not a good place to remain short IMO!Trade closed manually
Closed all the bull spreads on midday rally; too chancy now. Let's get clear signal!Still holding the ETF SPXL, small hedged pos.
Note
Still long for short-term but hedging that bet with small pos in VIXY and picked up May $20 VIX calls for net debit $2.70; you cannot write diagonal calendar spreads on these, as each series is linked specifically to the futures contracts for that month. If you try to write a calendar spread by shorting a higher strike of a different month, it's a naked short and you have to post stupid high margin!Trade active
Added to shorts on 12/4 in what looks to be a fierce bear market rally. IMO B wave is likely complete at 3119 today. Expect to head South to target 3030 - 3050 for C leg.Note
B wave may complete around 3124 - 3130; Dow 27800 +/- 40 pips. Expect to kiss the lower TL and reject from breakdown zone. Indexes forming bear flag in typically ragged B wave countertrend move, high volume on selling, low on buying. Entering additional short positions in DIA, SPY & QQQ; accumulating VIX May calls strike $20 and VIXY, UVXY shares. NB: VIX forms a bull flag, inversely proportionate to equity price action. C leg in this minor correction target ~3040 +/- 10 pips, Dow ~ 26800 +/- 100. There is strong support zone there at the October breakout zone. Do not expect a massive selloff, this is a bull pullback, normal trading behavior, not a panic.
Note
Not sure if we get another C leg or just roll into an impulsive 5th from here. Either way there will be selling sometime next week whether it starts down a C leg from an irregular expanded flat B, or if it forms wve 2 in 5-wave impulse of Five, we very likely gonna get a chance to either stop loss and step off flat, or even come ahead if a bearish reversal signal generates. As surprising as the bullishness has been on Friday 12/6 after rosy jobs report (I really expected this to be weak, as the Oct report we got in Nov was tepid), notably the 5m volumes all day have been alternating between bull/bear and resisitance at the secondary top does suggest prices may have peaked again at the same level. Looks like distribution ongoing, imo in fact, behind the scenes. I'm holding half my bear spreads, and closed out partial position to realize significant gains on the short legs, of >80% in some contracts. Added VIX calls May $20 strikes and more VIXY, UVXY. These don' expire so you get to just hold them until they realize improvement! You can write calls on them while u wait, and I am; but look out for VIXY calls' thin liquidity and wide MM spreads.
Good weekend to all!
Note
Looking at price and volume, we got a H&S or triple top forming with volume not confirming price. Look at RUT, SPY, same thing. volume 2/3 of the size from big peak. This will sell, and soon IMO.DOW THEORY:
Bull Trends have three phases: Accumulation, Public Particiaption, Excess;
Bear trends have three phases: Distribution, Public Participation, Despair >Panic.
We are clearly in Excess, with Distribution ongoing even now if you study the 5m and 15m volumes, a terrific amount of selling went on Friday even as the prices rose; smart money is dumping shares into the market at these high prices.
There may be as much as 1% remaining in this Bull wave before rollover. I take positions, hedge and wait! When it starts, selling will be sudden and fierce.
Have a look at Dow Theory again, refresh these 6 simple tenets:
investopedia.com/terms/d/dowtheory.asp
The Trend is ur Friend, till the End when she Bend! GLTA!
Note
Resistance at 28K. Trump will likley attempt to manipulate this week, therefore rolled out of Dec into Jan strikes, hedged bear spreads.Trade active
Yeah... here it comes! Look at the selling volume in the last hour; closed EOD at low and futurz run lower aftermarket. Pattern has been buy x3-4 dayz, then sell x3-5 dayz. Prolly gonna sell all week unless Trump Tweets; "WE GOT A DEAL!"LOL, no 'deal' in sight...
Note
Hmm well we got an extension to make the deal anyway; market sniffed at it and sold but IMO is real possibly making a higher low here, although I expected a deeper sell. I closed puts in the AM rush and added some VIX calls on the pullback, so playing this a bit closer to chest with 6-month volatility bet on calls.
It is quite possible and likely that bulls could run back up for one more try at the ATH in Dec/Jan AKA 'Santa Rally.' R/R is poor again, take what the market gives!
Note
Feels like a bear rally and retrace, so I'm shorting it in QQQ Jan 204P and SPY Feb 315P, on $2 spreads hedged against Friday 13 strikes.Trade closed: stop reached
Yeah those damned tweets... stopped out!
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.