Most of my thoughts from the weekend post: Weekend, 5/7/16 – That was an Ending Diagonal and Members Video: Detailed Market Update for 05/7/16 remain the same.
Today, we consolidated in a B-wave between
2048 and 2058 in a double zig zag.
Trade of the Week Status
Our trade of the week is on track. We actually have two trades — an option trade and a futures trade. The option trade benefited nicely from the weekend time decay. So even though today we closed basically the same as on Friday due to consolidation, our position actually increased in value a decent amount. This is one of the beauties of the specific trade strategy that we chose that takes advantage of weekend time decay in options.
Today’s S&P500 30 min Chart
On Sunday night, we got a 3-4-5 and today we opened the markets within wave a. But we failed to breakout at 2058 — so the market just went back down to retest the lows after the market close at 2048 — likely completing wave B.
What follows next will likely be C-wave up into resistance –as long as 2045 ES holds – and how the market reacts there will be very telling as to whether we have big movements either up or down.
S&P Hourly Chart From Weekend
We broke out of the diagonal but mostly consolidated between 2058 and 2048ES.
Previous Nasdaq Hourly Chart
Even though the Nasdaq broke out of the down trend line and ending diagonal — it wasn’t able to make it past 4356 — and instead consolidated.
That was a still a possibility I mentioned in the weekend update — saying that we could pull back and retest the trend line first and that looks like what happened today. So mostly consolidation action today before the next move.
