SPX in ABC Correction: In 'B' Wave Bear Flag
Updated
See related post in the 15 min chart for bear flag; here see it really clearly in 1-hr; it is possible the Gap from Tues could fill before heading lower; or just break down from tip of wedge. Friday should give us a pretty clear signal. Entered some shorts; add if it bounces higher; this is a Butterfly pattern CD leg; it is taking the form of an ABC correction. Target is Index 2740 +/- 20 pips. C is usually a bit longer than A and extends somewhat, but should be at least as long; hence, ~140 - 180 pips from 2900 (target 2720-2760).
The Bull rally after correction could carry index to new ATH above 3100-3150 by EOY at the 1.618 Fib extension!
Trade at your own risk! This is not advice; just an idea; GLTA!
The Bull rally after correction could carry index to new ATH above 3100-3150 by EOY at the 1.618 Fib extension!
Trade at your own risk! This is not advice; just an idea; GLTA!
Note
Algos liked the jobs report although it does not support a further rate cut, they pumped futurez anyway. Opening prices could well be the HOD; if it gaps up, will surely fill intraday. ETF's trading between .40-.90c higher premarket, a reversal from overnight prices. Futurez are slipping before the bell back to closing prices. Eurozone traded widely bear/bull, down early on then modestly bullish on US jobs report. Asian markets sold off 1%. Overall trend is down and sentiment Bearish. Adding to shorts in open, not full in yet as 10/01-10/02 gap was from 293, can still fill; and will go all-in if it does. Weekly hedges minimize drawdown, I always trade spreads just in case I'm mistaken!Trade active
It closed the Mon/Tues gap down; now it will close today's gap up. I added to position, closed my shorts from last nite for <5c. and then rolled all my contracts up 2 strikes and shorted dailies expiring today for a net credit! LOL never have to lose on a short option.Now short indexes in following pos, 20 contracts each: IWM Nov 148P; DIA Oct 25 263P; QQQ Nov 187P; and SPY 25 OCt 292P (just moved into the money, yay); shorted dailies expiring today, Monday or next Friday 11 October in Bear spreads. GLTA!
Note
Dow 26400, SPX 2933 looks lke a good short entry at the gapfill and 0.50 Fibo!Trade active
Guys I make no secret about my positions. I am long 80 Puts on four indexes as I wrote above. I put my money into this idea and if I am wrong I will suffer (but the guys that bought my short hedged contracts will suffer more- total loss for them!). I do NOT recommend buying far OTM contracts, these almost always lose 100%. I buy near the money or slightly ITM contracts with at least 3 weeks' time in them. Options decay geometrically; 80% of the time value decay occurs in the last 30 days, so these either gotta move PDQ or get rolled. I roll for credit by selling short OTM puts. The value fluctuates but I rarely have to realize a loss, and sometimes make good bank off these trades. People ask "How can you say it's going down again? It's so Bullish!" IMO That is Exactly When it Goes Down, LOL. Get ready. I do not know what day will sell. Probably next week; maybe the BB wave will extend until the following week and reach the 0.62 Fibo. I started shorting at 0.382 Fibo b/c we never know when it's coming! Position size is all- now committed to a 50% account position. GLTA!
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My harmonic model projects target zone 2720 - 2760, likely tar 2740. It's a Bullish Butterfly 'M' pattern, now in right leg of the letter M. These usually dig a bit deeper on panic.See my candid comment in related post today. IMO it will sell and I bet a lot on it!
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RUT now trades flat on day, it's a leading indicator. Might sell Mon or Tues IMO.Trade active
Got a bear flag on top of the bear flag now...Note
Tenaciously hangs for hours at exactly 0.50 Fibo on both SPX at 2937 and Dow at or near 26440. A 'C' leg equal in length to the 'A' leg would carry SPX to 2797 from this price. Target remains 2720 - 2760 with capitulation.Trade active
Eerie how the Dow clings to 26444 the exact 0.50 Fibo... SPX nailed to 2938, same. Might get EOD short covering rush rally + FOMO. Don't bet the whole farm at this price; can still go to 0.618 or even 0.786 Fibos, although a typical ABC is 0.382 - 0.618 Fibo B wave.
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Yep here it is. Don't panic folks. ~1/3 of trades in these rallies are from short covering. I rolled up my short puts for a net realized gain of between 60-90% on the shorts, and the rolled contracts went in half again. See what prices we get Monday and roll your long contracts up to a higher strike. Although this costs a bit, when it turns, you realize gains much more rapidly than by waiting on your first position to recover. Right now after realizing gains on the shorts, my position is 1/3 of account. Size you positions for your account size, never plunge all in!The 0.618 Fibo is at 2960; this rally got really close at HOTD SPX = 2953.7; expect a tad higher on Monday. Rallies caused by tweets rarely last long; it would be imprudent to buy into this market as some kind of pullback is almost certain.
A retest of the TL next week is very likely. Still not sure if this is a wedge price chnnel drawing to a squeeze point, or whether the Butterfly will finally emerge from it's coccoon. Stay tuned; good weekend!
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Reached the exact 0.618 Fibo at 2959.75. Short entry opportunity.Hedge your bets; could still squeak higher. Upside here is rather limited IMO.
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FYI folks closed the position waiting for re-entry. Any gap down stands chance of getting filled and this was a big one, driven by 'trade fears' and global 'fake news', most of which is perpetrated by The Donald. SO, likely to get at least some retracement. I bought some AMD & GE in covered calls while we wait. Not ready to buy calls just yet but it was time to close out some puts for ~30% gains. Not bad for a day's work!See my related post on Harmonic Theory. Still not sure if that will pan out or whether we get bounce off the lower TL back into triangle. It is still a Bull Market for the time being and I still expect higher prices EOY, but it's gonna be a rocky road IMO. Very chancy here!
For this particular idea; notice we are trading just above the rising TL of bottom channel; this COULD be a retest of lows and a higher move MIGHT be around the corner, or at least an upper channel test if it becomes range-bound. Nothing is certain; take what you can get when you can get it!
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Trade is still on folks, waiting for EOD to see how it closes. Might get some short covering but triple combo punch of Trump foreign policy + Powell "This ain't QE!" and China tariffs go into effect on 15 Oct makes setup for a deep selloff IMO. Could start down Wednesday IMO.Trade active
Back in Nov SPY 290P and Nov QQQ 188P on $5 Bear spreads. Looks Bearish IMO,Note
Added IWM Nov 147P spread against Friday 144s. Good luck folks!Note
Added 10 Nov DIA 263P spread against Friday's 257.5; looks like a failed TL retest.Now re-established half my position; add if we get another rally.
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Added 5 more contracts to each position; now in 45 Nov puts on 4 major indices.Moved down so quick I had to roll some of the short legs on Bear spreads, lol.
Always do that for a credit, never need take a loss on those short contracts!
IMO a serious correction can start very soon; now rumors circulating that trade talks have stalled before they started. China is getting irked and hostile, Trump accuses them of human rights violation, they ban our footballers, and tariffs kickoff next Tuesday. IMO if Trump gets pissed at them he will jack tariffs more and blow up the whole mess. A deal now seems a remote possibility at best IMO.
Today Powell told us "THIS IS DEFINITELY NOT QE!" repeatedly. So no more rate cuts, as expected. Hold inflation near 2% and stay the course, he said.
The downtrend course, LOL. Gone short again; GLTA!
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Reduced position to a 5 contract calendar spread on the technical pullback.If China is ready to make a deal as they hinted today, then all short bets are off.
R/R is poor again; resting at TL support, strong bounce today; (+) news will explode it up into channel, stay cool, be safe!
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Rumor mills grinding fake news; sell-buy-sell-buy; dont' get caught in BS. Just waiting for real news. If Chinese delegation goes home early then sell the Hell out of it!Trade closed manually
Closed all stops out waiting on news. R/R terrible; pure gambling now. When direction is clear then bet on the trend IMO.
Note
We have 100% retracement now in a batwing harmonic over past week. This is really terrifying... look at the huge gap; an exhaustion gap IMO.
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OKAY! "Buy the Rumor, Sell the News"; I am short again and selling the news of a small partial deal to trade soybeans and suspend 15 Oct tariffs. The terrific enthusiam of past 3 days crries indexes to 100% retracement from 01 October prices; it is a Batwing formation. Last time we got this was in Nov/Dec 2018. I doubt we get a severe decline just yet, but expect that huge AM gap to fill back down and likely test bottom TL again within a week.
Shorted QQQ; in Nov 192P spread against Oct 188P; SPY 300P spread vs Oct 295P; DIA 270P spread vs Oct 266P; and IWM Nov 152P sperad v Oct 148s.
So, $4 bear diagonal spreads trading next month vs this month's weeklies.
GLTA!
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Added in post - market to all four positions now holding 25 each Nov puts on above indices, 100 ITM puts on position; these moved so fast I was forced to roll the short weeklies out to next series and down $3 so these are now $7 Bear Spreads. Have a great weekend all!Note
Retracement from 01 Oct was perfect; another identical double top, lower than the last pair in September. ALgos driving it, is too perfect, ergo; program trading.Trade active
Last time we saw this string of gaps up was 29 Aug - 12 Sep. Been running pretty hot for October past 2 weeks; IMO exhaustion gap and retest the TL and high prices on Tues 10/15. Expect imminent rollover; possibly might still test ATH. I am short!Trade closed manually
Seems like bullish undertone persists. Advancers > Decliners; breadth firms up; IMO this beast wants to retest the ATH. Useless to hold shorts while it does this; but too risky to bet that it will. Sidelined again; stop lossed. Look for blowoff rally to re-enter. R/R poor again until we get a clear signal IMO.
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