Between December 30, 2015 and January 15 — the S&P500 dropped from 2075 to 1849 — a roughly 226 pt drop in just two weeks. Here’s a summary of what happened — starting off with:
1)a leading diagonal,
2)a 3rd wave drop that finished A wave down—
3) a B-wave triangle —
4)a 3rd wave that ended with a truncated 5th wave,
5) an ascending 4th wave triangle —
6) a clear 5th wave down —
7) a hero 4th wave that fell apart overnight into what might be capitulation 5th wave with a V-shape bottom.
Zooming in, the intraday 5 minute char began at the at the market open 9:30am at 1860, went as low as 1849 at 12:40pm, and then closed at 1876:
Instead, today (really overnight, we had an A down to 1912, a B up to 1921, then the C-wave down supposedly — but that extended way beyond what I expected. I’m also having trouble properly labeling the drop.
The V-shaped bottom at 12:40pm EST was also an unusual pattern.
We did initiate a new trade for next week to take advantage of the elevated volatility level in options and time decay over the weekend. Good thing we shorted calls at yesterday’s high and cashed out half of our trade up there. With elevated volatility, you never know what happens overnight.