ORIGINAL POST: 2:30 AM
I’m traveling over the balance of the week, so posts will be a bit spotty.
After bouncing around quite a bit, SPX ended the day on a solid down note. We closed below the rising wedge, but not quite enough to put a fork in Wave 2 just yet. I’m looking for a close below 1340 (Tuesday’s low) for starters.
Ideally, we’ll see a bounce up to 1350 to back test the wedge and complete a small H&S; pattern before heading south. Given that Friday is OPEX, I think it’s actually fairly likely — unless we have the massive sell-off that’s entirely possible with a market that’s this far stretched on the upside.
Daily RSI broke its trend line, and has a ways to go before finding support. My gut tells me 1355.87 was the Wave 2 top, so I’ve added some short positions. I’m long puts on SPY (tight stops), SBUX, AAPL, XLF and MSFT and calls on VIX on the IHS completion.
I’m also long the dollar and short the euro and gold. I’m expecting the euro situation to worsen over the next few days, and at least a .05 move in EURUSD in near term. Look at the past patterns and you can get an idea what can happen when EURUSD jumps channels.
AAPL came very close to our 529 target and reversed hard. At 19% of the NDX, it should take the rest of the tech sector with it. MSFT completed a well-defined Crab a few days ago, and is reversing nicely now.
Gold continues to come under pressure, although prices have been choppy. I expect it to sell off with the rest of the market next week, if not sooner; but, I’d bail at a move over 1765.
I’ll add to positions if/when the downside gets going, but am the equivalent of about 40% net short, with options comprising about half of that.
One thing I’m considering doing on the new website is posting actual trades in a model portfolio. If this interests you, let me know. The only tricky aspect is putting on trades that the average investor would feel comfortable following: ETF’s, long puts and calls, spreads, straddles (nothing fancy). I would stay away from futures and most individual stock names. Please give me your thoughts.
Good luck to all.