Finally! Yes – some big movements in the stock market and we caught some good chunks. In my last post, the title mentioned that “S&P, Nasdsaq Offering Better Opportunities” — at the time the market was looking up. Regardless of which direction, it was clear the indices were actually moving – as opposed to crypto which is somewhat stuck at the moment.
Early in the week, we saw signs that the market was not following through on a 3rd wave setup. We alerted to members that if that was indeed a failed 3rd wave follow through, then what follows next would be a C-wave down. We immediately exited our QQQ long calls and entered into UVXY – effectively shorting the markets by buying volatility.
Now, volatility didn’t spike as much as I thought it would – or not as much as it did during that initial A-wave down but it did move up as news of Trump tariff wars with China came out in the days after we bought volatility.
Of course, it wasn’t immediately green – because the Fed day on Wednesday brought a spike up – but I had enough conviction of the chart pattern to hold onto the UVXY position through that Fed announcement – and through all the intraday ups and downs – all the way til the close on Friday – when we exited 60% of our position. In hindsight, a larger position size or index puts should probably have been used, but our direction call for the market to come down when the move was large was spot on this time.
Cryptos have been getting annihilated, though the chart is showing some promise.
This is the best count I can think of that can still fit the textbook Elliott Wave pattern where we have 5 waves up and a-b-c correction toward $7600. The key is holding $8200 in order for this to hold true. If so, bitcoin better make some move upwards.
Between the big 3 – bitcoin and litecoin seem to be the stronger ones whereas Ethereum is still lagging.
The Fed announcement on Wednesdsay March 21 – brought that spike up to 2750 ES just after the announcement – and then it reversed. That reversal was key – because then overnight, we began the descent in what appears to be a wave 3 – which was itself split into i-ii-iii-iv-v waves as shown above.
Stepping back from a daily candle perspective – we had a setup for a 3rd wave up – which failed. A failed 3rd wave becomes a B-wave top – as shown in the labeling above. What follows next is a C-wave down.
When I saw this possibility happen – I gave it some time to see if it could reverse back up – but once we made that first wave 1 down, I alerted to members that if that was a failed 3rd wave – then what follows next will be a C-wave down. And that is indeed what happened.
Notice the top in the S&P was Sunday night, January 28, 2018.
Trump’s State of the Union Address was 2 days later on January 30, 2018 – and the Big drop happened on February 2.
Back then on that Saturday, January 27, 2018 weekend post, I wrote:
This market is seriously due for a correction but based on the potential a-b-c formation, we issued a buy alert earlier this week at around 2844 ES – and exited too early at 2861 ES – because the last hour on Friday pushed the market allt he way up towards 2875. People say cryptos are in a bubble – seriously?? Have you seen the S&P chart?
Here was the chart at that time on January 27, 2018 — the “5?” indicating what I felt should be some market top soon.
Indeed, that 2875ES level marked the top in the S&P futures.
While that day was the top for the S&P – it wasn’t the top for the Nasadaq – because after that early February mini-crash it went way back up to make a new high (see below chart).
If we stick to the same A-B-C theme – notice that the Nasdaq made a significantly higher B-wave top. If this C-wave comes down, it will very likely not reach the bottom of wave A. So if A = C, then the size of the C-wave down will be limited to the downside, maybe just another 100 or so points down from 6550 NQ to maybe 6450 NQ – where the pink line is.
Ideally, I want to see this dip below 23000 in order to create an A-B-C pattern. Given the spikes that happened in the A wave down – it’s likely that even if we get there, we won’t stay there for long. So the 3 lines represent possible support zones – to keep in mind if we get to those levels.
If you are new to crypto – the most popular place to get started is Coinbase – use this link to get $10 in bitcoin when you sign up. For smaller cryptos, I’ve been using Binance – though I’ve been having issues verifying my identity with them. So far it seems to be one of the better platforms for getting exposure to various cryptos.
Robinhood has $0 trade commission for stock and will soon have it for cryptos.
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