Post 19th Thesis
Updated
Okay, this is based off the previously posted "19th" thesis.
Issues
* Januarys' ATH is arguably Decembers' tail-end
* February peak has been $458
Risks:
* Long term trend (white triangle) indicates continued declines
* Either until March 1st to be optimistic
* or until March 14th if taking into consideration a further drop to 42x
Assumptions
* 42x is the floor.
* we have not reached February lows
* we continue to resist at
44X
Opportunities
* if 43x is the floor, we will begin the breakout between February 22nd (end of day) until March 1st +
A cautionary example recently is September, where the 19th drop continued after a small bump, all the way to October 4th.
In that example, it took 10 days to rally from 43x to 44x (almost two weeks).
Final Thoughts
* If holding calls, it would be reasonable to seek relief on a bounce, as Theta decay will kill them until the recovery.
* it is still reasonable to purchase calls throughout any continued drop or side-ways trading, as44X will be within range.
* it is a risk to hold puts.
As you can see, this is not a short-term, day-trading thesis, and began in January ATH with the assumption we will continue a cycle of the 19th downturns.
That thesis has seen the SPY fall from $479 -> $428 between January 4th and 27th (with the first major drop happening on the 19th).
From this perspective, the Thesis is successful for a $50 drop, and puts should have printed hard by now.
Day trading would burn on the inter-week swings.
Do we call a bottom? No we don't. We exit put profits throughout the month until the 18th, and begin purchasing calls in anticipation of the 43x bounce-back.
With the hope it will bounce to an ATH.
Aside from accumulating and holding calls for the next 20-30 days, we will re-enter the "19th" thesis at our next either ATH (
48X+) or Inter-month / quarterly high ($458).
Key Indicators: MSFT AAPL, which providing contradictory trends.
The gut says we will see the drop to 42x.
- red-arrow-down icon represents the 19th drop
- green-arrow-up icons represent follow-on ATH
Issues
* Januarys' ATH is arguably Decembers' tail-end
* February peak has been $458
Risks:
* Long term trend (white triangle) indicates continued declines
* Either until March 1st to be optimistic
* or until March 14th if taking into consideration a further drop to 42x
Assumptions
* 42x is the floor.
* we have not reached February lows
* we continue to resist at
44XOpportunities
* if 43x is the floor, we will begin the breakout between February 22nd (end of day) until March 1st +
A cautionary example recently is September, where the 19th drop continued after a small bump, all the way to October 4th.
In that example, it took 10 days to rally from 43x to 44x (almost two weeks).
Final Thoughts
* If holding calls, it would be reasonable to seek relief on a bounce, as Theta decay will kill them until the recovery.
* it is still reasonable to purchase calls throughout any continued drop or side-ways trading, as
44X will be within range.* it is a risk to hold puts.
As you can see, this is not a short-term, day-trading thesis, and began in January ATH with the assumption we will continue a cycle of the 19th downturns.
That thesis has seen the SPY fall from $479 -> $428 between January 4th and 27th (with the first major drop happening on the 19th).
From this perspective, the Thesis is successful for a $50 drop, and puts should have printed hard by now.
Day trading would burn on the inter-week swings.
Do we call a bottom? No we don't. We exit put profits throughout the month until the 18th, and begin purchasing calls in anticipation of the 43x bounce-back.
With the hope it will bounce to an ATH.
Aside from accumulating and holding calls for the next 20-30 days, we will re-enter the "19th" thesis at our next either ATH (
48X+) or Inter-month / quarterly high ($458).Key Indicators: MSFT AAPL, which providing contradictory trends.
The gut says we will see the drop to 42x.
Note
See latest snapshot, where we have a more aggressive drop, bringing the bottom date to February 24th (first star).Bottom following October and January. patterns.
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