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Option: SPY Jan 13 224 calls Purchase price = $1.96 Quantity = 5
Dollars at Risk: $1,000
Exit price = 2.87 on Jan 4; 3.14 on Jan 13 %
Return = around 50% profit (~$550)
Pattern we predicted: B-wave low after a 4th wave (learn more about this pattern in the members section) Entry Date: Jan 3
Exit Date: Jan 4 and Jan 13
Price of S&P ES at purchase: 2240 ES
Price of S&P ES at exit: 2261 ES and 2271
ES Days Held: 1 and 10
Here’s our entry from last week – we exited at 2260 and 2271 for roughly 50% and 60% gains.
Looks like the rally on Jan 11 was a B-wave fakeout – but still within the overall picture structure.
The drop on Jan 12 was an intraday dip that reversed and we are basically in the same place where we closed on Jan 11. With this MLK 3-day weekend, it’s possible that we dip towards 2260 before turning back up.
The market would have to consolidate in the 2270 region in order for the more immediate bullish pattern to play through. The markets have been again stuck for more than a month.
When the markets dipped on Jan 11 — I do have to note that it did not pierce the bottom of wave 4 – which is below 2255ES. Usually an a-b-c wave ii down should ideally just pierce it and then reverse. It was close enough that I thought the wave ii would be complete.
But it turns out the a-b-c was part of a larger A-B-C which then broke below 2255ES and found support at 2248ES before reversing intraday.
At first, it appeared when Trump spoke @ 11am on Jan 11 – that it triggered a quick c-wave drop – to conclude the basic Elliott Wave pattern. But actually, the pattern to the downside was not completely.
The end of day rally to 2272 was actually a b-wave fakeout. The futures overnight would reverse and the next morning right at the open would drop heavily back below the bottom of the Trump announcement.
I’m adding this insight to the Elliott Wave pattern database where I’ve been putting together a database of real-life examples of patterns appearing – and the subtle intricacies that are involved.
So this is one example adding to the basic Elliott Wave pattern. Members can see the full catalog of patterns and specific real-life examples of each one.
Right now the small wave i could either be at 2267 with wave ii at 2263 — OR wave i was at 2273 and wave ii is not complete – with us at the b-wave high followed by a c-wave down towards 2263. Yesterday’s S&P500 Daily Chart
The daily chart remains basically the same. The question is whether the market will follow through on the setup or keep delaying.
Basic Elliott Wave Pattern
I want to point out the basic Elliott Wave pattern on the right. The C-portion is extended a bit too long in the diagram – bu generally speaking, the C-wave should dip below the bottom of the wave 4.
In the S&P chart – the wave 4 was just below 2255ES. But on Jan 11 – we only went to 2255 ES – not quite piercing below.
When that happens – sometimes that means we only completed a larger A — and what follows is a B-wave fakeout up — and then the real C -wave comes back down to pierce the bottom of wave 4 to reverse. Turns out that’s what happened. Sign Up!
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