SPY -SPX Could This Be the Market Trail into the Election?
Updated
SPY could be forming a wave 4 in a triangle pattern. There are interesting possibilities
as we go into the elections that could result in a range bound market.
This is typical for a 4th wave pattern. The uncertainty of the approaching elections
"creates" the battle between the bulls and the bears.
Lots of info on the chart, so let's dig in!
Many traders are calling the green label wave 3 high and the sudden sell off down to (yellow label A),
the 4th wave.
We disagree. We think that this is simply wave A of a bigger correction.
A correction that will at least have an ABC pattern (as shown by the dashed pink line)
...and preferably an ABCDE triangle pattern for wave 4 as shown by the solid pink lines.
If this happens, we could have some excellent trades going into the election on Nov 3!
We have purchased a lot of Nov 20 SPY 355 puts at $10.00 as shown by the black arrow on Oct 12.
Notice the completion of the smaller (blue) Bat pattern at the 88.6% retracement of the recent sell off, up in the red sell zone (labelled yellow B)
This is a good low risk position to go short, or buy puts. We are still near this zone and patiently waiting for the market
to go back down again as we look for yellow wave C in the buy zone.
Obviously if price breaks the all time high, (wave 3) then this bearish trade is voided.
Of further interest is the Mercury retrograde starting Oct 13 (today) and should have a negative (sideways?) pull on the market until Nov 3.
He He He... election day! Then Mercury returns to direct motion! (bullish)
We may bounce around in the black triangle proposed until then, thus creating some fast whipsaws as the market consolidates.
The proposed solid pink trail allows for the ABCDE pattern with a false breakdown to the bear side after(?) the election results.
This could be very emotional and shakeout the bears, yet again, and then suddenly reverse back up to the bullish side.
The bigger purple proposed "Deep Crab" pattern is still in its early phase of building. We are simply proposing this pattern and will trade
accordingly unless proven wrong with a break below the yellow Wave A low as noted by the green label. In which case the bigger bullish trade is voided.
The "Deep Crab" usually projects 161.8% extension of the X wave (Green label 3 down to Yellow label A) as a move to the upside.
This could be a massive move for the bulls!
as we go into the elections that could result in a range bound market.
This is typical for a 4th wave pattern. The uncertainty of the approaching elections
"creates" the battle between the bulls and the bears.
Lots of info on the chart, so let's dig in!
Many traders are calling the green label wave 3 high and the sudden sell off down to (yellow label A),
the 4th wave.
We disagree. We think that this is simply wave A of a bigger correction.
A correction that will at least have an ABC pattern (as shown by the dashed pink line)
...and preferably an ABCDE triangle pattern for wave 4 as shown by the solid pink lines.
If this happens, we could have some excellent trades going into the election on Nov 3!
We have purchased a lot of Nov 20 SPY 355 puts at $10.00 as shown by the black arrow on Oct 12.
Notice the completion of the smaller (blue) Bat pattern at the 88.6% retracement of the recent sell off, up in the red sell zone (labelled yellow B)
This is a good low risk position to go short, or buy puts. We are still near this zone and patiently waiting for the market
to go back down again as we look for yellow wave C in the buy zone.
Obviously if price breaks the all time high, (wave 3) then this bearish trade is voided.
Of further interest is the Mercury retrograde starting Oct 13 (today) and should have a negative (sideways?) pull on the market until Nov 3.
He He He... election day! Then Mercury returns to direct motion! (bullish)
We may bounce around in the black triangle proposed until then, thus creating some fast whipsaws as the market consolidates.
The proposed solid pink trail allows for the ABCDE pattern with a false breakdown to the bear side after(?) the election results.
This could be very emotional and shakeout the bears, yet again, and then suddenly reverse back up to the bullish side.
The bigger purple proposed "Deep Crab" pattern is still in its early phase of building. We are simply proposing this pattern and will trade
accordingly unless proven wrong with a break below the yellow Wave A low as noted by the green label. In which case the bigger bullish trade is voided.
The "Deep Crab" usually projects 161.8% extension of the X wave (Green label 3 down to Yellow label A) as a move to the upside.
This could be a massive move for the bulls!
Note
sorry guys, the yellow label A is hidden behind the harmonic blue label A... no worries, wave A is the same place
Note
Target reached today. Sold the Nov 20 SPY 355 puts for 26.24. Today went to the lower end of the green buy zone.It is important to watch the low of wave A. If price continues below that point, then the triangle idea is voided
Note
Will buy calls tomorrow to play for wave D as shown in the chart above. Low risk down here. ... remember watch the low of wave A. If price breaks below that, then this pattern is voidedNote
Bought Dec 18 SPY calls at $16.50. Looking for a bounce up for possible wave D. Note price touched the lower downsloped channel (black line). Near that point we bought this morning.
Remember to watch the low of Wave A. If price breaks below, then this pattern is voided.
Note
So far, so good. Looks like we have the possible wave D building. As we have election results (still in limbo) this morning, we are now watching for price to get near the upper black resistance line. This is the proposed triangle boundary. Thinking the 350-352 sell zone for the calls bought last week. As we write this update Trump is contesting the Wisconsin ballots. We need to carefully watch for this fast wave D rally to complete. The election results may drag the market back down iand start a potential wave E as shown. Also FED speak tomorrowNote
This morning price hit our projected sell target in the 350-352 range nicely. Thinking this completes wave D. we sold the Dec 18 SPY 325 calls at $30. For a very nice profit. We then bought Dec 18 SPY 350 puts for $11. Now looking for wave E downNote
no wave D or triangle. pattern made a simple ABC. now market should pullback to the breakout area around 351-353. The Purple Deep crab is still in play and has not been voided yet. Instead of selling our puts near the open, We bought more puts near the open for $5.81. we will sell the puts near the breakout area and then buy calls cheaper at that point.Note
Purple deep crab pattern is working nicely. Continue bullish calls upwards to the red sell zoneNote
Geeting closer to complete the deep crab pattern. Looking to sell when price gets in the red Sell Zone shown. Plan still on track
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