Yellen spoke in London yesterday at 1pm:
Fed Chair Janet Yellen said the banking system is “very much stronger” due to Fed supervision and higher capital levels.
Yellen also predicted that because of the measures the Fed has taken, another financial crisis is unlikely “in our lifetime.”
Read that second one again.
Yellen says another financial crisis is unlikely in our lifetime.
Whenever someone prominent says something like this – it almost always ends up being a curse – probably not in the near future – but I’d say some time in the next 5-10 years, we’ll be experiencing something pretty bad.
So how did that affect the markets?
It gave is that big red candle, which got completely reversed today.
Effectively a massive Yellen Fakeout.
This past week, we held the IWM June 30 ’17 140 calls when the Russell TF futures were at 1411. Our exerts were at 1415 and 1425 today.
Of course, the profit wasn’t as much as I would’ve liked due to the 3rd wave taking longer than I expected – we finally got that 3rd wave today – this is what I was looking for all week and time decay from the option reduced what could have been a bigger profit trade.
Cryptocurrencies bitcoin and ethereum experienced a mini-crash this past week. We alerted a potential buy for ethereum in chat at $260 2 days ago – it’s now at $308. Of course, you had to be able to stomach the volatility, but it’s a decent amount higher at the moment.
Yellen spoke just after the top of wave pink 2 at 2437 ES.
What followed next was continuous selling until 5am this morning – then all of a sudden we had nonstop green hourly candles ever seen – except for that one red hourly candle into 2436 ES – which was bought shortly afterwards.
I am expecting some sort of top in the 2442-44 region – ideally a pullback towards 2430-2435 would be ideal.
The previous S&P chart – showed a failed 3rd wave — next time I label a “3” – I should simultaneously label that a potential B in case it fails – as I have one in the below Russell Daily chart.
With yesterday’s post Yellen big wave 2 drop with a big red candle, we got an even bigger green candle – indicating we are in a 3rd wave up.
In the Russell, we had a 1-2-3-4-5-A-B-C Basic Elliott Wave pattern. The last C-wave drop was deeper than I had expected – dropping basically to where the bottom of the wave 2 was at 1401 TF.
While such a drop can appear scary – it was critical to maintain calm and patience. Of course, I had the opportunity to exit at 1420 yesterday but didn’t before Yellen’s speech at 1pm.
Our IWM call option was also getting closer to expiration – so in hindsight should have taken that opportunity to exit at the b-wave high at 1420 TF.
What followed was a sharp c-wave bringing us back to 1401 – followed by the 3rd wave up – which I was waiting for all along – finally happened.
We exited half at 1415 (too soon) – and the other half at 1425.
1430 is in the cards – and any pullback to 1421 would be a buy.
In early May we had a 2 day nasty Nasdaq plunge towards 5630 — in what I have labeled as the pink a wave drop.
Then we got an a-b-1-2-3-4-5 b-wave rally towards 5830 NQ.
Then we got another 2-day c-wave drop – this time just piercing the prior lows followed by a fierce reversal.
You can tell lots of people were shorting the Nasdaq – essentially fueling this sharp rally since 5am this morning.
Gold has completed 5 waves down with the 5th being the potential fat finger trade.
We are still below the 1260 prior high – so gold will need to move over that level in the next few days in order for this set up to work.
Silver has a similar setup as gold – except it is higher than its prior June 23 high – so looks to be in better shape than gold.
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