S&P 500 IndexUpdated mirror, mirror... 1.272
The entire 2019 rally appears to be a 1.272x mirror image of the 2018 ABC selloff waves. Since I believe we are in a D wave of a large corrective expanding triangle, I expect the current rally to be a 5-3-5 corrective wave, where we are currently in a sub-wave 3 (or 4, if you think we're already turning around).
Notice how each wave of the rally has been roughly a 1.272 extension of its mirrored wave from the 2018 selloff. If this theory holds true for the current wave C, then we are currently mirroring the Oct 2018 wave A impulse which implies a projected move of 435 pips from the August bottom of 2773, giving us a target of around 3210.
I think we are at/near a short term top. 3112 is the 1.272 extension of the 2018 selloff and I think a retest of the previous ATHs around 3020 is needed before a move higher.
Current strategy: Dec 31 310/295 SPY put spreads + scalping Jan 31 SPY 311 calls on dips. Accumulating calls @ 3020 and lower. 2950 is crucial support, a daily close below it would be devastating for markets on a technical basis.
Make no mistake about it, on a fundamental basis being long at this point is to be a willing participant in a Ponzi scheme. Supporting indices like consumer discretionary and transports are screaming danger ahead, the VIX is bottoming w/ record levels of short positions, and AAII investor sentiment is once again back in +40% bullish territory. Liquidity from the fed repo op + speculation on a meaningless "phase-one deal" is creating a massive asset bubble that makes naked shorting suicide.
I feel like the time to go full bear is pretty obvious. Sell the news on the signing of the phase-one deal... especially if this happens to coincide w/ my 3210 target. You don't wanna miss the wave E if you're a bear.
Notice how each wave of the rally has been roughly a 1.272 extension of its mirrored wave from the 2018 selloff. If this theory holds true for the current wave C, then we are currently mirroring the Oct 2018 wave A impulse which implies a projected move of 435 pips from the August bottom of 2773, giving us a target of around 3210.
I think we are at/near a short term top. 3112 is the 1.272 extension of the 2018 selloff and I think a retest of the previous ATHs around 3020 is needed before a move higher.
Current strategy: Dec 31 310/295 SPY put spreads + scalping Jan 31 SPY 311 calls on dips. Accumulating calls @ 3020 and lower. 2950 is crucial support, a daily close below it would be devastating for markets on a technical basis.
Make no mistake about it, on a fundamental basis being long at this point is to be a willing participant in a Ponzi scheme. Supporting indices like consumer discretionary and transports are screaming danger ahead, the VIX is bottoming w/ record levels of short positions, and AAII investor sentiment is once again back in +40% bullish territory. Liquidity from the fed repo op + speculation on a meaningless "phase-one deal" is creating a massive asset bubble that makes naked shorting suicide.
I feel like the time to go full bear is pretty obvious. Sell the news on the signing of the phase-one deal... especially if this happens to coincide w/ my 3210 target. You don't wanna miss the wave E if you're a bear.
Note
Fun w/ fib spirals using 3210 projected target... will we see the 2100s in 2021?Note
My PT for leg C here was 3209-ish. There's a bearish deep crab from the aug/sep corrections w/ 1.618 extension at 3211. Let's see if this area concludes the mirrored move from last year's selloff...
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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.