UPDATE FOR 4/8 & Suggested timing & entry strategies:
First, let me say thanks to one and all for your gracious response. I'm very grateful to have the opportunity to make a positive impact.
Now, for the update:
As you all know, I was expecting the C wave down of this corrective pattern that began on 3/20 at 3:45pm to begin Monday, 4/6, with the window for the down move to open after 2pm. Mergermania pushed the end of B and the start of the C wave to first thing that morning, and after the S&P June futures traded up to 1142.3, the C wave down came to life.
You EW'ers know that C is a 5 Wave move, and my time calculations are now set in stone for the window for the C wave down to last 7.25 trading days, give or take a few hours. So from early on Monday, 4/6, that would allow for an open window through next Wednesday morning, 4/15, around 10:30am, give or take.
Thus far, we have nearly completed the 1st of these 5 waves down. The 1st of 5 waves can itself be broken down into 5 waves, with the 1st wave moving from 1142.3 to 1131.10 (4/6-12:42pm). The second wave (a small degree ABC corrective wave) started here, and finished at 1135.80 (4/6-2:14pm). From here, the severe 3rd wave down began, and carried the market down to 1110.50 (4/7-3:12pm), a 25.30 point move. From there, wave 4 up began, and as of the close, it had finished the a part of 4, and brought the S&P's back to 1119. Resistance to the c part of the 4th wave up will come in at 1124.70, which many of you will recall was the "point of no return" number I gave earlier this week. Not that the c part of 4 can't take the market higher, but I don't give it a very high probability (less than 20%). In the unlikely event that it does. I would expect 1131.20 to be impenetrable.
When the c wave of 4 ends, which should be early Wednesday before 11am, Wave 5 down will begin. When the S&P's fall more than 6 points from the high they make early Wednesday, you will know that wave 5 is in motion. I will look for a pattern at the top of wave 4 that might be helpful in predicting how far down wave 5 will run, and If i find anything conclusive, I'll update. EW theory suggests that wave 5 often is the same size as wave 1 when wave 3 was larger than 1 (as it was in this case), so we MAY be looking for something 11.2 lower than where wave 5 began from. However, I've seen too many cases where wave 3 was larger than 1, and the subsequent wave 5 was larger than 3, so I don't plan to cover blindly, at say, the theoretical 11.2 points lower than where the S&P's make their turn down. If we get a larger wave 5 than 3, which I think is probable (60% or better), that would take the S&P's under 1100, which is more inline with my original blueprint.
I will not cover any shorts if wave 5 pulls up before taking out 1100 on the downside. The reason is, the large degree Wave 1 down will have taken 2 whole days to complete by tomorrow morning, and was very complex in formation. Therefore, reliable wave theory holds that a simple, and quick corrective wave follows a complex impulse wave, and vice-versa. Thus, I would expect the Large Wave 2 to last for about half a day, and rally no higher than where the smaller degree wave 4 terminates early Wednesday morning (1124.70 prediction).
THIS LARGE WAVE 2 RALLY WILL BE THE BEST OPPORTUNITY TO BUY PUT OPTIONS, NO MATTER WHERE IT TERMINATES. EXPECTED RETURN ON PUTS: 20 to 50X. Why? Because Wave 3 will be on deck, The godzilla of wave moves, especially as we proceed into the smaller degree wave 3 of this large wave 3. 1987's Crash was a wave 3 of 3 of C collapse, as was July of '96, April of '97, and one that you'll all remember, 10/29/97, the largest point collapse ever. Does this one have potential to exceed all of these in terms of point losses in the indices? Sad to say, Yes (Well maybe I'm not really sad :o)..). In fact, my projection methodology that I mentioned in prior post that I've used to accurately predict every large correction in the past 3 years, and which also accurately predicted the size collapse in '87 and '90, has a very stark forecast which I shutter to think about.
Judging by the activity on this thread now, and the torrent of private posts I'm receiving, these calls are being followed by a large number of traders. I would prefer not to ever be accused of calling the market down to a certain number for my own benefit, and don't care to be investigated by the SEC for market manipulation, so I'll withhold the exact projection for now. But I will give a clue as to this number, and from the clue, and my prior posts, the inquiring mind should be able to figure it out. The projection calls for a level on the June S&P futures where when you multiply 14.969 by a Biblically significant number (one which all Bible scholars should be able to click right off the top of their head), you will arrive at the target.
For those not Biblically inclined or who don't care to slosh their way through my prior posts, just stay tuned to BK, and when we reach the point when it's time to cover shorts, I will announce with a big "NOW!". Warning: the bottom of the move could come BEFORE the Wednesday morning window closes. That would be the case if wave 3 overachieves in devastation, which oddly enough happened in '87 and this past October. Would Monday be a fitting day for such a spectacular move down? Hmmmmm. And what's the event over Easter weekend that will be spawned to bring the market down? I dunno, your guess is as good as mine. All I know is anybody long futures or short puts after Thursday's close is taking their life into their own hands!!
Prepare the harpoons!!
David |
