With options expiration week behind us, and a look at the current wave count, I'm expecting some early strength next week. If, however, we instantly break down below Friday's lows, then that would mean that the rally we had late on Friday wasn't an 'A' wave but it was in fact the entirety of our wave 4, and we will be testing the November lows in no time.
I still contend that the selling hasn't gotten started. Bulls continue to buy every dip in hopes of 'catching THE bottom'. It won't be until they give up hope that we can ever get close to an intermediate bottom. One that will provide the foundation we need for a multi-quarter bull market to the SPX 1000-1100 range.
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Assuming one has nerves of steel:
ReplyDeleteI'm 60% in cash already, with index tracking ETFs to give me upside exposure (rather than mutual funds) and very small (<1%) positions in USB, WFC, and GE. 5% in PG.
Is there any rational reason to stick with these positions through the EW s***storm you predict?
Zach,
ReplyDeleteIf you really want to hold onto these, then what I would do is buy some insurance (april puts) and sell some calls (april calls) against your positions. I would buy out of the money puts and sell at the money calls. That should cover your premium and limit your downside as the market tries to find a bottom.
Rich, Your count looks like this wave down is a small 5 of 1 of 3 of 5. Are you expecting a bounce up this week for 2 of 3 of 5 before we plummet into 3 of 3 of 5?
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