So, this is what I'm looking at on SPY moving forward, and it's currently my most likely scenario. I think the US is headed towards a type of lockdown varying in severity, but i'd bet on it happening. I also believe if Joe Biden wins, his strategy may be to inverse Trump & go into lockdown mode (as American sentiment towards Trump's handling of COVID is majority negative). So, I believe this drawdown we're currently experiencing heads back to demand at 320. There's no big buyers stepping in yet, and no reason for them to. After earnings AH today, there's not one major positive catalyst pre election.
So, 320 by Election Day is my base case. Then, a quick bounce in the days after, as by that point we'll have been oversold, big buyers should return and start scaling in, and we see a break back over 330 for the handle. The certainty that comes with even just having the election over and decided should provide a positive jolt to the market, with the actual choice of President potentially being secondary.
Now, assume Biden wins. It seems he has the momentum coming into Tuesday, so I'll operate on that assumption. Suppose we are at the 330 level end of next week, handle completed. As mentioned before, I believe news comes out about Biden's plan to close parts of the economy, and most likely the news is spread over the course of a week or so, SPY drops, breaks demand zone, and we experience a series of smaller timeframe demand breaks. Our next solid demand on an hourly chart comes around 312.
Side note: Check out SPY weekly chart. An ABC correction is still very, very much in play. I've marked it off on my chart. Start thinking about scaling into long term positions.
Disclosure: We are short SPY in an option position.
So, 320 by Election Day is my base case. Then, a quick bounce in the days after, as by that point we'll have been oversold, big buyers should return and start scaling in, and we see a break back over 330 for the handle. The certainty that comes with even just having the election over and decided should provide a positive jolt to the market, with the actual choice of President potentially being secondary.
Now, assume Biden wins. It seems he has the momentum coming into Tuesday, so I'll operate on that assumption. Suppose we are at the 330 level end of next week, handle completed. As mentioned before, I believe news comes out about Biden's plan to close parts of the economy, and most likely the news is spread over the course of a week or so, SPY drops, breaks demand zone, and we experience a series of smaller timeframe demand breaks. Our next solid demand on an hourly chart comes around 312.
Side note: Check out SPY weekly chart. An ABC correction is still very, very much in play. I've marked it off on my chart. Start thinking about scaling into long term positions.
Disclosure: We are short SPY in an option position.
Trade closed: stop reached:
broke out so far on today's rally - no reason to continue tracking this pattern
