Long

US 30 Possible Bullish Scenario: Rosy Perfection

Updated

Last time we had Cup & Handle in Jun/Jul the market roared up 2k pips. Now we got a monster consolidation in August, with a perfect Cup formation; the countertrend Handle should follow shortly, as an EW 5-wave minor impulse is concluding now, in the right wall of the Cup. Another 2k pips from this level would target Dow price over 29K. SPX could push over 3200.

Expect ATH on Friday or Monday, with weakness leading into the FOMC and after the decision. Trump says now he will consider 'interim trade deal' with China; if they can get a handshake on a partial solution in October we are gonna see a mammoth explosive exuberance into the New Year. If the Fed also plays Dovey and we get a happy meal, we'll have a Perfect Rosy Scenario in which put holders and call short-sellers get creamed.

I offer this alternative hypothesis to the corrective structure I published earlier. IMO it could get really, really Bullish this fall, look out shorters!

This is definitely NOT investment advice; just a short-squeeze nightmare. Trade at your own risk; GLTA!

Note

Looks as if we may have peaked on Thursday; confirm on Monday.

Trade active

Approaching Tl support; if break then expect technical rally to TL and rejection to downtrend.

If bounce at support 26880 may bull fiercely if positive global news.

A partial trade deal in October could push to new ATH by year-end. 30K is possible.

Dismal failure again will insure selloff; however, Fundamentals are strong so bull can go on after a correction to support around 24700. US 30 PE is <20; SP500 is 23.2 as of 9/16. Historical crashes occur at PE 30.

Note

Support box for next leg up between 0.62-.76 Fibo, 266 - 269. Wouldn't bet on a huge tankoff even if Powell disappoints, which he has a track record of now. Added a cheap bull spread to my bears just in case; SPY 18Sep 301-303 cost .64c. Let's see... GLTA!

Trade closed manually

R/R is extremely poor now; anything can happen at 2PM. Pure gamble now; showed a small gain in position so closed all out, defensive sit on fence. Holding 1k GE long as only position, short 10 01Nov $10 Calls.

Trade active

Houston we have liftoff! Long on MS, DOW + GE, shorting OTM calls. Look at SPY and QQQ calls in AM; RUT has been bullish and IMO will resume; IWM and IVAL might be good.

I shorted puts when Dow went -200 against the margin equity in my long shares.

The handle formed on cup and tested TL Weds 9/18 after FOMC.
Terrific support- buyers waiting under 27K. Bull until October IMO.

Note

Reflecting on this further I see index sitting on a right shoulder of a larger right shoulder. L >H R from May > Jul > Sep; we are in high risk for correction zone atm.

Even higher prices should follow in the New Year. Hedge your bets or sit this one out!

Trade active

Looks to be forming a double double top here with rejection from ATH price level on SP500, Dow diverges from DTRans, weakness in several sectors showing up in ER guidance from tariffs etc. Risk is likely at maximum for longs at this level so I closed them and entered initial hedges short positions on DIA, SPY, QQQ and IWM.

Bear spreads against November puts, sold weeklies expiring Friday.

Trade closed: stop reached

Moved so fast had to roll the short OTM put contracts down and out. Double top and a shooting star Bear signals. We must take what the market gives us. It is useless to be a Bull in a Bear market, even worse than being a Bear in a Bull. You will get killed by wrong thinking. IF the markets want to sell, follow the trend, therefore I am CLOSiNG this thread and will publish a new idea soon. Meanwhile:

Here's a simple bear spread trading tip:

When you short 10 contracts for .25c and they double to .50c in a few hours, don't panic, be happy the spread is moving your direction; and ROLL the rascals like this:

Rather than trade 10 x .50c puts for 10 farther OTM, longer term 0.50c puts, a move which would cramp your short position, you can remove part of the hedge and instead roll 10 x.50c into 5 x $1 puts. This will free half your position from the spread. If down trend accelerated you can roll the short 5 into 2 or 3, leaving most of the position free of the spread. On a bounce against trend, you can sell any combination of other puts to re-create the spread, or just cover the short side on a rally and add to the long puts. Of course, removing the short side of spread increases leveraged risk exposure, as a sudden reversal will tank your longs; this is why I keep a few shorts in spread just in case. Last week I did real well with holding bear spreads hedged with a cheap call bull spread; the combo of short puts and long calls reduced losses to ~5% (unrealized; these later became profitable again!).

I do expect ONE more rally before throwover, these waves seem to proc in 3's, look back at the waves in May and July, see there were 3 tiny micropeaks on each top, each micropeak was a bit smaller than the previous.

In May the top lasted from ~first peak April 23 to 3 May, and produced three top-off microrallies on 23rd, 30 and 3 May. This formed a left shoulder, first ATH and was followed by the A-B-C textbook correction.

in July we see the exact pattern reproduced from 12 - 30 July; a second, higher ATH, a taller peak, again with three micropeaks on the plateau, followed by Bloody August meatgrind.

May triple peak top: ~10 days; July: ~18 days; a little taller and it lasted a bit longer to form the Head, the most Bullish part of the formation.

The August correction from July Head peak was a deep grind, rather than a vertical plummet, and lasted a full month. It was a rough ride for Bulls and Bears alike, we all took a beating getting whipsawed. In a previous idea I observed it could have broken either way, finally the Bulls took charge and broke it up.

September has produced the Right Shoulder peak beginning on 11th with a 12 Sep microtop at 3020 and today on 9-19, a second rally attempt attaining the same price on SP500, but lower prices on Dow 30, RUT, NQ and divergence in Transports. The brief love affair flirting with small caps seems to have ended, as IWM sank precipitously in late session. I doubled down on IWM puts and later rolled the 20 short .40c puts into 10 x .80c next weekly puts as described above, leaving 10 open contracts.

First the pumptards were taking funds out of FAANGs to pump up RUT, but now they're just taking funds out.

Note

Expect a third and final micropump to a slightly lower peak on 9/20 and/or 9/24; The bottom might be expected to fall out sooner than it did on the left shoulder, as right sides of H&S have lower volume, fewer buyers, less bull power and brief duration. Right shoulders tend to be more pointy and spike down hard when the buyers fail to pump up the prices. No new money is coming in now, only algos are moving funds and rotating them through sectors to churn profits on nickel and dime spreads. This will be a 'bottomless drop' IMO.

This final topping wave should last between 9-13 days; of which 20 Sep is day 9.
The wave completion Bear confirmation signal will be rejection from the third micropeak rally attempt.

THE CORRECTION FOLLOWING THIS RIGHT SHOULDER WILL BE STEEP AND DEEP; A DOUBLE BOTTOM FROM DEC 2018, BEGINNING SOMETIME IN WEEK OF 23-27 SEPTEMBER IMO.

LONGS GET OUT NOW! GLTA!

Note

Still follows the charted path. If bulls can hold this support level and enough money flows in from foreign markets, we could get a run to new ATH by year-end. Very risky to be either short or long here; in my bones I feel like a bull wave might kickoff from here, we tested TL support, if it holds here this could be an Intermediate Wave 2 in a Primary Wave 5 coming off the Cup & Handle, thus invalidating the Bear hypothesis. Sitting out until we get clear signal; please be cautious traders!

Trade closed: stop reached

It's correcting rather than bulling although Bulling may come again later this year. be safe!

Note

A Harmonic Butterfly pattern is evolving. This is a more powerful and compelling formation than Cup/Handle or H&S, which are more likely to be spurious. See my latest post; pattern projects Dow 24,224 by 29 October with subsequent rally to 27,716 by EOY. GLTA!

DaddySawbucks

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