US 30 in ABC Correction? Road to ATH; in Handle of Cup
Volume lessens on rising prices, increases on downdrafts. RSI divergent. Small caps have reached .50 Fibo retrace off September's lower high.
SP500 and Dow have a gap to fill down to the 0.50 Fibo.
Three-day rally feels like a B wave, chaotic and widely fluctuant. If so, expect C wave down to the gapfill at the breakout point from Cup near 26300/SandP 2942.
A hedged short here is probably a fair R/R as EOM 'window-dressing' is likely to finish what seems to be a modest correction. The ABC is consistent with Intermediate Wave 2 of a Primary wave 3; markets should enter third-in-third wave on completion of the modest correction. A severe tankoff would invalidate this hypothesis!
IMO another major October downdraft is unlikely as these rarely happen two years in a row; but anything is possible in this mad market.
Taking a small short position on indexes with the gap up in AM on 9/27; this gap will very likely fill in day; first week of October is likely to be choppy.
Completing a corrective wave might coincide with positive trade news in Mid-October; if the outcome is disappointing expect a deeper selloff.
Still very chancy. Indicators to watch: RUT strong support at 1500 (IWM 150, now trading near 153); small caps have been a leading signal canary.
I'd close shorts with IWM at 150; DIA at 264; SPY at 294, if and when they get to these prices. An ABC complete wave could well provide launch point for next bullrun.
Longer-term still Bullish going into New Year, I'm not convinced this appearance of H&S in the monthly chart is really going to rollover. We shall see!
This isn't investment advice; just an idea, trade at your own risk; GLTA!
SP500 and Dow have a gap to fill down to the 0.50 Fibo.
Three-day rally feels like a B wave, chaotic and widely fluctuant. If so, expect C wave down to the gapfill at the breakout point from Cup near 26300/SandP 2942.
A hedged short here is probably a fair R/R as EOM 'window-dressing' is likely to finish what seems to be a modest correction. The ABC is consistent with Intermediate Wave 2 of a Primary wave 3; markets should enter third-in-third wave on completion of the modest correction. A severe tankoff would invalidate this hypothesis!
IMO another major October downdraft is unlikely as these rarely happen two years in a row; but anything is possible in this mad market.
Taking a small short position on indexes with the gap up in AM on 9/27; this gap will very likely fill in day; first week of October is likely to be choppy.
Completing a corrective wave might coincide with positive trade news in Mid-October; if the outcome is disappointing expect a deeper selloff.
Still very chancy. Indicators to watch: RUT strong support at 1500 (IWM 150, now trading near 153); small caps have been a leading signal canary.
I'd close shorts with IWM at 150; DIA at 264; SPY at 294, if and when they get to these prices. An ABC complete wave could well provide launch point for next bullrun.
Longer-term still Bullish going into New Year, I'm not convinced this appearance of H&S in the monthly chart is really going to rollover. We shall see!
This isn't investment advice; just an idea, trade at your own risk; GLTA!
Comment:
Nice day trade on the gapfill. See if it bounces!
Trade active:
R/R for holding position over weekend is poor; White House could pop a happy bomb on Sunday evening. Closed shorts in day trade for a day's pay; gonna have a worry-free weekend folks; GLTA!
Comment:
Intraday it appears to be forming a C&H in the Handle of the larger Cup! LOL, nice bounce! QOTD: To short the retrace, or not to short, that is the question; whether tis better to suffer the slings and arrows of outrageous fortune or just sit out, aye, there's the rub! I choose to sit out.
Trade active:
It turned Friday at 2942 exactly at the breakout point, as I projected in this post; IMO Trend is still Bullish, near end of a 4th Wave, finished Handle of the Aug Cup exactly at .050 Fibo on cup wall.
Shorting here likely to be a disappointment IMO; some downside risk still present but most Bearishness shaken out in August. Statistically when Aug is Bear, trades Bullish to EOY. Many betting on Oct flashcrash.
Probably won't happen 2 years in a row... I bought Nov 294 calls on SPY; hedged with Daily puts.
Shorting here likely to be a disappointment IMO; some downside risk still present but most Bearishness shaken out in August. Statistically when Aug is Bear, trades Bullish to EOY. Many betting on Oct flashcrash.
Probably won't happen 2 years in a row... I bought Nov 294 calls on SPY; hedged with Daily puts.
Comment:
IMO October could be a bad surprise for the Bears this year, a huge 10% rally is quite possible, as October marks the End for Bears more often than not, and following a Very Bearish Aug/Sep, is likely to be rather Bullish:
" starting in 1970, the average annualized gain in October has been 11.6%, making it the fourth best month of the year."
www.barrons.com/arti...-history-51567199263
and;
"From a historical perspective, October has marked the end of more bear markets than it has acted as the beginning. This puts October in an interesting perspective for contrarian buying. If investors tend to see a month negatively, it will create opportunities to buy during that month. "
www.investopedia.com.../o/octobereffect.asp
" starting in 1970, the average annualized gain in October has been 11.6%, making it the fourth best month of the year."
www.barrons.com/arti...-history-51567199263
and;
"From a historical perspective, October has marked the end of more bear markets than it has acted as the beginning. This puts October in an interesting perspective for contrarian buying. If investors tend to see a month negatively, it will create opportunities to buy during that month. "
www.investopedia.com.../o/octobereffect.asp
Comment:
*Correction to note above: Dow turned above the 264 projection, showing terrific support, while SPY dipped briefly under 294 projection and then boomed EOD. Monday will tell whether this is the pivot!
It is Bullish divergence in these indexes. RUT found support at 1500 and I bought calls on IWM at 151, Dec 31 Contracts were cheap! Hedged with cheap daily puts, be cautious here!
We could still see a deeper 'C' wave next week, a washout low. Be prudent!
Buy when there's blood running in the streets, even if it's your own!
-Baron Rothschild
www.investopedia.com...rarian-investing.asp
It is Bullish divergence in these indexes. RUT found support at 1500 and I bought calls on IWM at 151, Dec 31 Contracts were cheap! Hedged with cheap daily puts, be cautious here!
We could still see a deeper 'C' wave next week, a washout low. Be prudent!
Buy when there's blood running in the streets, even if it's your own!
-Baron Rothschild
www.investopedia.com...rarian-investing.asp
Trade active:
We could see a triple top around 273 with S&P back around 3K this week, then more volatililty. I'm still expecting a washout low in mid-October for a C wave, then Bully to EOY. 264 is the target zone; Dow could visit 273 once more before it goes there.
This peak we traverse now does not have the appearance of an H&S as the 'right shoulder' is significantly taller than the left was; and the 'neckline' is skewed. It is a wedge formation; eventually these break down. Shorting is still risky as a countertrend rally to the primary downtrend could be a sharp squeeze!
Longer-term I reckon the wedge will likely extend higher before a real correction.
EOY Tar: ~278 - 282. Could see 29k in the New Year if a China deal gets done.
Take small hedged positions and watch them closely, nothing is certain at this juncture!
This peak we traverse now does not have the appearance of an H&S as the 'right shoulder' is significantly taller than the left was; and the 'neckline' is skewed. It is a wedge formation; eventually these break down. Shorting is still risky as a countertrend rally to the primary downtrend could be a sharp squeeze!
Longer-term I reckon the wedge will likely extend higher before a real correction.
EOY Tar: ~278 - 282. Could see 29k in the New Year if a China deal gets done.
Take small hedged positions and watch them closely, nothing is certain at this juncture!
Comment:
NIce analysis here, caution is in order: finance.yahoo.c...-064142749.html?.tsrc=rss
Trade active:
Okay folks nice pumpup today so I closed the Bull IWM + SPY spreads and am holding on to an IWM Bear spread for Oct 4. RUT will go first if it rolls over this week. SPY has been most bullish of the indices, so I closed that bear spread.
On the side I wrote an Iron Condor for SJM, trading near $110, shorting the $115 Nov calls spread against Oct 120s and shorted the Nov $100 puts for a net credit of $2.10 on 500 shares. Jam never goes out of style; next earnings 22 Nov these contracts expire before that. Last ER SJM tanked 10%, since recovered so it's a buy around $100 bucks.
Also shorted puts on MS Oct 41.5 for .63 credit on 500, will own the stock at $41 if they get put to me. I have a long call spread on MS in June 2020 41C, shorting weeklies every week. After three months of this, weeklies will pay for the Leaps.
This is much cheaper than buying 1000 shares, for about 10% of the stock price you get to play. If stock declines $4 your 1K shares would be out $4k; the options will still fetch about $2 bucks so you would actually lose less, surprisingly!
On the side I wrote an Iron Condor for SJM, trading near $110, shorting the $115 Nov calls spread against Oct 120s and shorted the Nov $100 puts for a net credit of $2.10 on 500 shares. Jam never goes out of style; next earnings 22 Nov these contracts expire before that. Last ER SJM tanked 10%, since recovered so it's a buy around $100 bucks.
Also shorted puts on MS Oct 41.5 for .63 credit on 500, will own the stock at $41 if they get put to me. I have a long call spread on MS in June 2020 41C, shorting weeklies every week. After three months of this, weeklies will pay for the Leaps.
This is much cheaper than buying 1000 shares, for about 10% of the stock price you get to play. If stock declines $4 your 1K shares would be out $4k; the options will still fetch about $2 bucks so you would actually lose less, surprisingly!
Trade active:
Bought 200 PFE and sold 2 Oct 36.5 calls for .50, puts me in the stock for $35.65. Shorted 3 contracts on PFE 01 Nov 35P for .54c in hopes of taking assignment. PFE trades near multi-year lows; IMO a bargain around $35. Deep discount could push it to $30-32; get more if it does.
Comment:
Adding a QQQ bear spread just 5 contracts for the Nov 190 vs 04 Oct 186.5s, net $4.80.
Comment:
NB: You get a six-week contract ITM and credit for the 4-day wonders OTM trading at >$1. Roll em if it drops, else you collect the dollar!
Comment:
Shorted puts on HAL the Nov 17.5P. Added a few QQQ 190P in bear spread. Could bull a few more days or crack tomorrow.
Trade closed: stop reached:
Broke under 50DMA and intense selling signals more volatility. The correction model appears to be the correct hypothesis. GLTA!
Trade active:
OOPS writing in the wrong column; this trade is running I did close half position on shorts and rolled short puts down and out. Looks on course for a C wave to retest breakout point. As the Bull market winds down, expect 'flight to quality' when investors abandon NQ and techs and roll into Blue Chips. This happens before the final capitulation, and could be a rolling correction that last for months.
Comment:
Yes it starts to look real Bearish atm. Hang on to ur hats!
Comment:
Cup and Handle is still evident; this idea is not entirely invalid yet, but breakdown past the breakout point will put an end to it. Handle should not exceed ~half of cup wall height. If it goes beyond 0.62 Fibo it's a broken Cup.
Comment:
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!
Trade active:
This idea may not be entirely DOA just yet. It trades in a rising consolidation pattern; and could still bounce from here, although it looks like the Handle got Broken, lol. IMO we can expect lower but could have an upside surprise; so don't get caught short!
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!
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!
Trade closed manually:
Looks like this idea might pan out after all; however:
Not really behaving as expected. Seems like a push to retest ATH is in progress. R/R lousy again; take what the market gives and be cautious:
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 short. R/R poor again until we get a clear signal IMO.
Can break either way from here- selloff or blowoff, a pure crapshoot now.
Not really behaving as expected. Seems like a push to retest ATH is in progress. R/R lousy again; take what the market gives and be cautious:
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 short. R/R poor again until we get a clear signal IMO.
Can break either way from here- selloff or blowoff, a pure crapshoot now.
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