Tippet,
We're in treacherous waters now, which is why i wasn't willing to go long any index derivative from Tuesday a.m.'s low. i would have been stopped out 3 or 4 times by now. That's also why i'm trading only lightly long with stock only (no options).
From the 1150SPX low Tuesday, I had us beginning a 5th wave up with a most probable target of 1190SPX or just under that, but with a minimum target of 1168. We made it to around 1176 twice now, and have stalled out. The minimums have been met, but we may still have more rally ahead. As long as we don't trade below 1150 for more than 30 minutes and don't go lower than 1145, and don't close below 1150, i have to give the upside the benefit of the doubt.
We may already be finished with the rally, and a break of 1150 will confirm that. However, we may have only completed the 1st & 2nd waves of a 5 wave move from Tuesday's low, with the 2nd wave being completed on today's close (forming a possible ending diagonal). If that is the case, a rally could easily extend into early to mid next week before the final high is seen.
I'm still holding my CCI & CPQ positions, but I'm hedged entirely by BEARX holdings, which is definitely a core I won't be letting go of anytime soon. Thus, even if we do head down from here, i won't feel the pain, as i've got good profits in CPQ and booked profits from MSFT to absorb the blow. I will close longs and return totally to the short side if any of the above 3 criteria are met. But I would much more prefer to close longs and go longterm, megashort at 1185-1190SPX, and I still give it a 60/40 chance of happening.
Regards,
David
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