I SPY a Bullish Butterfly: In CD Downleg before ATH
Updated
Similar idea to my Dow US 30 post. Sand P is statistically a stronger model, from larger numbers.
NB: This model is imperfect as the XD spread should be 1.27, but we got a real nice 0.62 Fibo AB retrace of the XA leg up.
Note the perfect double top Fibo = 1 (was within a few pips, a 99.9% retrace).
Real life is like that, we take what the market gives us.
The Bearish CD corrective retracement of the XA Bullish leg should be slightly deeper and show true capitulation to create the bargains that fuel next drive to ATH.
Moel extension suggest low prices to occur on/about Monday, 28 October. The Dow pattern projects 29 October, the 90th anniversary of the '29 crash, how fitting!
If model is an accurate projection, expect final support near 273. There will likely be a counter trend corrective wave up within a few days that will fake out buyers.
Capitulation begins when the new players buying at these still pricey levels get disappointed. That's when the real opportunity exists. Wait for it!
THe entire movement appears to be a 4th Primary wave; If model is correct, the resulting fifth-in-fifth wave to ATH will carry ETF to 315+; when Sand P trading above 3150!
This isn't advice, just an idea based on Harmonic trading pattern model. Market can easily double-fakeout, be cautious! GLTA!
NB: This model is imperfect as the XD spread should be 1.27, but we got a real nice 0.62 Fibo AB retrace of the XA leg up.
Note the perfect double top Fibo = 1 (was within a few pips, a 99.9% retrace).
Real life is like that, we take what the market gives us.
The Bearish CD corrective retracement of the XA Bullish leg should be slightly deeper and show true capitulation to create the bargains that fuel next drive to ATH.
Moel extension suggest low prices to occur on/about Monday, 28 October. The Dow pattern projects 29 October, the 90th anniversary of the '29 crash, how fitting!
If model is an accurate projection, expect final support near 273. There will likely be a counter trend corrective wave up within a few days that will fake out buyers.
Capitulation begins when the new players buying at these still pricey levels get disappointed. That's when the real opportunity exists. Wait for it!
THe entire movement appears to be a 4th Primary wave; If model is correct, the resulting fifth-in-fifth wave to ATH will carry ETF to 315+; when Sand P trading above 3150!
This isn't advice, just an idea based on Harmonic trading pattern model. Market can easily double-fakeout, be cautious! GLTA!
Note
Watch the TL extension on XB line. Typically after breaking the floor, a rally back to the line until rejection is characteristic. Then the waterfall cascade.Note
Would not chase the Bears; it bounced from 200 DMA and should retest TL. R/R is poor at this price for any position; closed all and waiting for signal!Note
Look back at 11-17 October 2018; rinse & repeat pattern; broke under the support TL; rallied over 5 days back to TL; then broke. Short the rally next week!Note
It'b bulling; expect rejection at TL around 291; either Fri or Monday. Short at TL.Trade active
Re-entering shorts on four major indexes at this price level. Making a bear flag- pennant flies again!Note
See my related post on SPX Bear Flag which attached to this post. Likely gap up and break down on Friday.Trade active
Rolled up SPY 292Ps to 293s, QQQ 187Ps to 188, IWM 148Ps to 150s, DIA 263P strikes to 265; and pushed all the dates out to Nov for .80c debit. My short contracts dwindle, they went in half, which paid for the rollups, so I rolled them into half the number of later expirations for credit, taking the gains from shorts and leaving half position free of spread (I.e., bought back 20 SPY 290s and sold 10 287.5s for a 0.01c credit, etc; this opens the long puts to unlimited gains).PRices closing the gap up, expect another bull flag in PM trading, would present another shorting opportunity.
Note
Ooops meant to say closing the gap DOWN; it is still possible this beast could run to the 0.786 Fibo on this up wave, although it appears to be stalled just under 0.618, so keeping at least half my position hedged with short weeklies, and only half of account in position- sizing is everything!Note
Got a perfect H&S intraday now...Trade active
SPX Jump on a tweet touched the 0.618 Fibo at 2960, SPY followed. Good entry IMO!Note
Algos selling the rally!Trade active
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 prepetrated by THe Donald. SO, likley 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 clos out some puts for ~30% gains. Not bad for a day's work!Note
Wow I rolled into a handful of calls midday and made bank on the 2 pm rally, closed minuted before the Powell speech tankoff: "THIS IS NOT QE!"Yeah, I figured they were done easing. Shoulda rolled into puts at 14:59 LOL!
Note
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 Wednesday IMO.Trade active
Back in Nov SPY 290P and Nov QQQ 188P on $5 Bear spreads. Looks Bearish IMO,9 minutes ago
Comment: Added IWM Nov 147P spread against Friday 144s. Good luck folks!
just now
Comment: 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.
Trade active
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!
Trade active
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!
Note
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.
Trade active
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!
Trade active
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
After the news release, it seems we got an exhaustion gap with a shooting star from open > close.If we close the gap up with a gap down Monday in light holiday trade, it would give us the 'Abandoned Baby' Doji- extremely Bearish.
Trade active
Follow along more recent posts; the 'D' leg appears to be taking form of an ABC correction. IMO the real selling is about to get started after what looks like an exhaustion gap up on Tues 10/15.Trade closed manually
Not behaving as expected. Seems like a push to retest ATH 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. R/R poor again until we get a clear signal IMO.
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