Looks like we are in a situation of sell the news. The bank stress tests will be released tomorrow along with a load of stocks. The impulsive nature of the last rallies has ended. I've outlined key support areas to watch. I expect the SPX to rollover at 924 or earlier. The Nasdaq likely already rolled over. When this goes, it should start with some fireworks. I did add some xlf june puts at the close. Hopefully this will make up for my may put losses ;-). That's the way the game is played.
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Rich,
ReplyDeleteThanks for your work. Originally came across your posts on Tony's site. I am amazed at how many of "us" just got it wrong. Coming out of (5) I did well. From 700 to 800 made money. Started shorting at 800 and it's been downhill ever since!! Hope your puts work out.
Randy, yes definitely true. But in the end I guess I shouldn't be too surprised. After all, remember some of those massive short covering rallies on the way down? Well, this is just a massive primary wave short covering rally. Congrats on getting the 1st part right! A triple zigzag off of the low -- who would have guessed?! Of course even now, until we start taking out some key levels, we're still in bull mode. The risk reward ratio is just too poor to go long. I think it will be the opposite when this rolls over. All the longs that joined the party late will be trapped for a very long time. Many of the bears will likely become bulls much too early. And of course some of the bears will never become bulls. LOL!
ReplyDeleteRich are we shooting for a .5 retracement?
ReplyDeleteRich, I think I see a 3 point overlap on wave one at 915.36 and the fourth wave at 911.43. Do you think maybe a third wave extension would solve that problem?
ReplyDeletesaleen - my target is a .382 retracement, but a .50 retracement isn't out of the picture. Remember that in a zigzag, if your wave a is sharp and steep, then often your wave c is drawn out and less than your wave a (i.e. c=a*.786). So, just because we got up so far in wave a, doesn't mean that we're going to the moon. Once A and B are behind us we'll have better projections.
ReplyDeleteBob, I'm counting this as an ED, so wave 1 & 4 should overlap. But certainly a wave 3 extention is a possibility. The subdivisions of wave 3 look corrective, which is the pattern for an ED: 3-3-3-3-3 instead of 5-3-5-3-5.
ReplyDeleteThanks Rich,
ReplyDeleteI'm learning a lot from you and Pedram
Thanks Rich,
ReplyDeleteI only got a view of a right chart at your blog since I can not draw that at my system without correct data. As opening a put, I think it is still not a good time now as I said previous day in which I said we would meet a period low at pm Tuesday but should open a put at end of May.
I stand by you because chart shows everything.
Hi Rich,
ReplyDeleteI'm a novice thats just getting into EW and your blog has been very informative. So what you're thinking is that we'll retrace about 30-40% retracement of the gains made in intermediate wave A which is ending, and then comes intermediate wave C up to about S&P at 1100-1200 followed by Primary C down to retest March lows and lower. Is this correct?
Nice Chart! Right on the money..
ReplyDeleteRich,
ReplyDeleteOn Monday you suggested you would not add any additional positions until we hit 866 on the downside. Are these still your thoughts?
suresh - I actually think we may have a very steep retracement of the intermediate wave a gains 50-78%. Then we will go to the 1000-1100 area to finish off primary wave 2/B.
ReplyDeleterandy - I have not added any additional ES positions; however, I have added my xlf puts and some QID.
Hey Rich,
ReplyDeleteBare with me on this one. The nomenclature is confusing the heck out of me and i may have used some wrong terminology, but i think i have my head around things for the time being...i hope :) What's your opinion of this these 2 wave counts:
1. SPX 666 to 876 (Major a of Primary B). 876 to less than 940 (Major irregular b of Primary B). We are now nearing the end of Major b and due for the Intermediate c correction of Major b to perhaps 848 and then comes Major c of Primary B all the way to 1000-1100 and then Primary C.
2. We havent finished Major a of Primary B yet. SPX 666 to 833 (Inter a of Major A). 833 to 780 (Inter b of Major A). And 780 till now has been a series of minor waves of the inter c of Major A. And the correction we are due for now is in fact Major b of primary B - Very much like your wave count if i am not wrong.
suresh, just so we are on the same page. I know not everyone names the different subdivisions the same in EW. But essentially, the way I have been talking is that primary 2/B will be made up of intermediate waves A-B-C. The intermediate waves will be made up of minor waves. I have been charting the end of intermediate wave A. I believe that intermediate wave B will be much deeper than many believe. My best target for wave B is to finish near 720. I believe that minor wave A of intermediate wave B will likely end in the 790-810 zone where most people will be thinking the uptrend will resume.
ReplyDelete