TRADER'S ALERT: READ MODIFICATION: We are definitely in a downdraft now that will carry the market lower in the next 20 minutes. Due to my data feed being out and leaving a large gap in my charts, my read has not been as definite as I would like, and I just uncovered an alternate reading scenario that could be applicable here. I don't want anyone to get needlessly burned, so I will provide a suggestion on action to take for protection.
The alternate scenario for today's action would be that the high at 1:26pm (1121.20 june s&p) was actually the completion of only wave A of the large wave 2 rally we've been discussing. Market action since then has been very supportive of this scenario. Under that scenario, we would have begun B down at 1:26pm. Wave B down is an ABC move, with A completing its 5 waves down at 2:30pm (1116.90 on the S&P fut.). B sprung to life there, and completed at 2:56 (1119.90 june s&p). From there, C down of the B Wave should run til around 4:00pm today.
Assuming this scenario is correct, and I'm leaning toward it now, one would want to cover puts around the close of cash trading (4pm) today (Friday) to avoid the C wave up of large wave 2. This would also prevent weekend premium loss on puts, and allow for reentry sometime mid monday at probably less than half what they are sold for today.
It will be impossible to predict how far C of 2 will take the market up on Monday, but it could still attack the 1124.70 area on the futures that I discussed earlier, and if that gives way, 1131.20 should still prove to be impenetrable.
A good sized megaphone pattern formation resulted in action from 2:06pm through 2:48pm. The downward break of that megaphone targets 1112 for the completion of this B wave down, I will be covering a portion of puts and short contracts in this area (assuming that this target is met before the close. If not, I will cover at 4pm, regardless of where the market is), and will hold 35% of my shorts over the weekend just in case the opportunity to repurchase at a lower price on Monday is taken away by some external event.
I apologize to one and all for the prior flawed read. If you are still around to act on this post, you will hopefully come out unscathed on all shorts entered into today.
Best Wishes,
David |
