After following the blue count with strong reaction from 2189, the market Fell and consolidated in a B-wave triangle, and then overnight began what would be a massive decline. I saw the initial signs of this, but did not properly trade it as I wanted to and I think it’s partially because I was pissed I wasn’t able to sell at a profit when the market touched 2189 – because it happened overnight, rather than during the trading session. Instead, the position became flat/negative when the market opened. I will have to learn to not let this affect my thinking and be able to adapt more quickly and be OK trading out at breakeven and even turning around completely.
After selling out half, the remaining half of our calls expired worthless – so the risk was defined ahead of time. It didn’t how much further the market dropped as the downside risk is the same. I just wish I were able to buy puts when the 5 waves completed and we got strong reaction at 2189. Result was we lost $800 for the week.
I also wish there were at least some kind of bounce during the day so I could have more confidence in putting in the short trade, but the market just went straight down.
For next week, I’m still wondering about when this bounce will happen, if at all.
In this CNBC article, there are several additional Fed people chiming in to public announcements on Monday, that could affect the markets:
8:05 a.m. Atlanta Fed President Dennis Lockhart
1:00 p.m. Minneapolis Fed President Neel Kashkari
1:00 p.m. Federal Reserve Governor Lael Brainard
The expectation was that last week’s Friday report meant that the Fed would not raise interest rates on September 20. Yet, on Friday, some Fed guy spoke saying that he wants to see a Fed rate hike in September – and that spooked the market and everything sold off. Maybe if one of these other guys speaks, it’ll make a little short-lived bounce and then continue the sell-off.
Unlike Brexit, this drop went straight down without any clear bounces to make sense of the wave pattern. This made it much more difficult to trade than Brexit, which was much clearer.
Looking back in June – here’s the Brexit chart – notice it was much easier to decipher what’s going on in the 5 min chart.
Compare the below with the above S&P chart, which has no bounces, much harder to figure out what’s going on.
In this chart, I correctly pointed out the possibility of the Blue count – if we were to get a strong reaction from the 2190 region – which we got a strong reaction from 2189 – that began the decline. Unfortunately, this high happened overnight Wednesday night into Thursday morning and I wasn’t able to exit my trade until the market opened, which I exited half, but in hindsight should have exited full amount and gone short, but I didn’t.
Next time I need to have more conviction of turning 180 degrees when I see the completion of 5 – waves — even if that means not being able to exit the trade at a profit because of overnight reversal. This is one of the downsides of trading options vs futures. With futures, I could have exited with a limit order overnight, but with options, I had not choice but to hold until the market open and at that point it might affect my psychology of going short when my prior trade didn’t make money. But I will have to not let these minor things affect my thinking and adapt accordingly. The completion of 5 waves was clear and I should have reversed and gone short
The Russell also did not have any bounce but there is resistance in the 1225/1227 region.
When silver popped up earlier in the week, I thought the probability of us getting a full 5 waves would be fairly strong – which would indicate potential follow through for the more bullish count. Yet, what happened instead was 3 consecutive red daily candles.
While these three red daily candles could be a wave ii — I’m more incline to see this as a b-wave bottom because we didn’t get a full 5 waves up, instead we got 3.
I’m expecting another attempt over 20 – but I expect to see resistances of 20.3/20.4 to bring silver back down. It’s not what I wanted, but that’s what the waves are telling me. I was really expecting 19.5 to hold, but it didn’t.
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