It's Crunch Time

Well folks, after days of contracting range (the 5 day ATR is now sitting at 19.9) and has been in this area since 4/17, I think the market is ready for some major range expansion. With that in mind, we are ready for some 3 of 3rd waves, which, of course, are always very powerful moves. So, I've decided to put together some short term charts (I know I haven't done this for quite a while). Both of these pictures would fit nicely into the range expansion puzzle.


Scenario #1 - Bearish. This of course is my personal favorite as I am majorly short with options that expire in just two weeks. Without some downside confirmation, I'll be exiting all of these positions no later than Tuesday. In this scenario, we now hit a wave 3 of c. Because we will be breaking a major trendline in this scenario, it should be very powerful. I would expect it to take us instantly (in 1-2 days) to the 800-830 area.


Scenario #2 - Bullish. Under this scenario, the market has actually been winding up in an incredibly tight spring getting ready to blow sky high. This would be a 1-2, 1-2, 1-2, 1-2, 1-2 scenario. The odds of this happening are extremely remote, but we have to leave it on the table. The fuel for this explosion would be of course the short sellers. This should take us to the 940 area in 1-2 days, and would probably not end until 1000-1100. There are all kinds of problems with this scenario, but until we get a bearish confirmation, we need to be aware of the possibility.