SPX Waterfall Cascade Targeting 2700
Updated
Simple idea. Getting bounce EOD 2/28 with follow-thru in ES Futurz overnight, Asia improving in early trade.
Black Swan event seems less likely now with VIX forming shooting star on Friday. Massive volatility spike with extreme bearishness typical of bottoms.
Market internals on Friday (A/D, new ATH issues at only 4 on NYSE, etc) equal to 24 Dec 2018 minicrash. VIX will not likely get to 49 again on second sell, always calmer.
Highlighted under arrows notice the characteristic 'h' patterns of secondary sells after brief rallies to 0.382 - 0.50 Fibo.
Box with target price suggests target for secondary sell wave, could be a simple double bottom, or dig a little deeper to the lower TL.
Fib time on the movement is short, typically few days to a coupla weeks as shown. Might only lift for 2-3 days before secondary sell.
Should start a real bullish move in April through May, and a summer rally to ATH as projectged at 1.272; 1.618 is possible in a blowoff.
Is the Bull dead? Maybe not yet... ultimate ATH tar at the 1.272 Fibo above 3500... let's see, crazier things have happened here!
Black Swan event seems less likely now with VIX forming shooting star on Friday. Massive volatility spike with extreme bearishness typical of bottoms.
Market internals on Friday (A/D, new ATH issues at only 4 on NYSE, etc) equal to 24 Dec 2018 minicrash. VIX will not likely get to 49 again on second sell, always calmer.
Highlighted under arrows notice the characteristic 'h' patterns of secondary sells after brief rallies to 0.382 - 0.50 Fibo.
Box with target price suggests target for secondary sell wave, could be a simple double bottom, or dig a little deeper to the lower TL.
Fib time on the movement is short, typically few days to a coupla weeks as shown. Might only lift for 2-3 days before secondary sell.
Should start a real bullish move in April through May, and a summer rally to ATH as projectged at 1.272; 1.618 is possible in a blowoff.
Is the Bull dead? Maybe not yet... ultimate ATH tar at the 1.272 Fibo above 3500... let's see, crazier things have happened here!
Note
NB: In extreme oversold conditions the 'h' pattern may not appear, but rather we get served with a 'V' mirror-image retracement, as we saw in Jan 2019... so waiting for the 'h' to appear may result in disappointment and missed opportunity; to play the odds against this contingency, you might buy a diagonal spread, going long on a 60 or 90- day contract and shorting the OTM weeklies to hedge risk.Note
Yeah Ka-Powell now says Fed will cut rates twice, but total of 0.75 -1 full basis point, BTFD!!!marketwatch.com/story/goldman-economists-expect-fed-to-cut-rates-soon-to-head-off-impact-of-outbreak-2020-03-01?mod=mw_latestnews
Trade active
Taking smallish positions in SPXL under $50 and buying puts on UVXY, in March $18 Strikes and April 17s, averaging ~$1.5 per contract with ETF trading at $24. Time decay strongly favors the short on this ETF, even a smallish rally will push it back under $20 as the futures in the ETF decay.
IDK about calls yet... maybe if it doesn't crack again Tuesday, LOL!
Note
Yeah shoulda bought the damned calls. Another monster whopper rally like 26 Dec > 27 Dec 2018 gave a firm pullback, lets see if we get one like that again to buy in!Added SPXL in the open and nice gains on the day, wow up 10%!
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Closed all longs in AM and shorted in PM its a free fall; going to 2700 or less. In QQQ weekly puts. Never seen this insane volatility its worse than 2018.Trade closed manually
Closed shorts EOD thinking it could still bounce to 3180-3220 at the .62 Fibo. Does look modestly bullish AH, so much whipsaw; it acts like a B wave, highly volatile, choppy, unpredicatble, violent swings, Bearish even when Bullish. Really hard to trade B waves, they chew up and churn your account, might just take small pos or even sit out and watchful waiting.Note
On track for a 0.62 retrace to ~3190; shorting over 3200, it gets close now. This definitely feels like B wave, wild swings, up/down 500 3-4 times in one session, up/down 1k day after day, extreme volatility, wild swings. Not a steady momo move up, a choppy struggle for higher, bull/bear wrestling match. These so hard to trade, every day a new adventure... risk is terrific atm for any position IMO.Note
As price pattern unfolds it appears virtually identical to Feb/Mar 2018, only more wild with even broader swings, which makes sense since price was almost 30% larger, the volatility swings are proportionately larger. In that bear wave the secondary sell reached a price slightly lower than the support from initial selloff (400 pips on DJIA; 60 pips on SPX, from 2593 > 2533 on 5-9 Feb '18).I expect a similar behavior this time, if it plays out in a similar pattern, the second bottom should come on or just before the 18 Mar FOMC IMO. If price behavior is similar, DJIA should double bottom at ~24200 +/- 100 pips; SPX at ~2795 +/- 20 (tar box in my chart). Not betting on this event as it can bounce any day and murder shorts... the price at secondary low won't last long, perhaps less than an hour, if it Bears down there, the Doji will be a Hammer spike. The subsequent rally will be ferociously Greedy and make new millionaires!
I think Powell is under pressure to give us another 50-Basis Pt cut and spark the monster rally to ATH later this year. After that... don't be long!
This is a strong correction made worse by intense irrational panic over the epidemic. Those fears will dissipate fairly quickly IMO. But the Bear will be back...
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Entering longs in SPXL; might get lower, might bounce, DCA down here...Note
VIX tapped 62 then fell back to 52... same price we swa 11-01-08, 62 was the high water mark; see if it holds here!Trade closed: target reached
Callinjg it good at 2734, lol. Helluva big day... went long @ 2760, added at 2745 in SPXL. Only worrisome on a big bounce gap up is... all gaps tend to fill...!Look:
marketwatch.com/story/the-sp-500-just-lost-a-stunning-76heres-how-the-stock-market-tends-to-perform-historically-after-a-black-monday-2020-03-09?mod=home-page
"on average, the S&P 500 index SPX, -7.59% has returned 12.75% in the six months after the daily 5%+ drop, and gains are also higher in the following day, up 4.2% on average, as well the next week and month, with gains of 5.1% and 3.2%, respectively"
Note
Closed longs on the big gap up as these are usually closed. Not sure i want to re-enter... could go down to test 200 week MA at 2660 IMO.
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