Monday, November 2, 2009

We likely finished our first wave 1 at today's low

With the back and forth ending we got today, I had to once again revise my wave count as we had two 3-4 waves and it matched nicely with two 1-2 waves at the top if you don't count a failed 5th wave. At today's low we got our perfect wave 5 divergence, and so now the market will be setting us up for a very low risk high reward play as we test the 1065 area. That will be the perfect area to buy Dec Out-of-the-money Puts on any of your favorite shorts: GS, AAPL, AMZN, IWM, QQQQ, XLF, etc... You could go with Nov Puts but it should be a very small position as if it doesn't get going immediately the time premium could wipe out your profits before you have them.

So far the market is setting up nicely, now we'll see if it cooperates.


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