Yesterday I shorted the SPX Futures when the ES was at 3709. Suffice to say my trade drawdown is at 17% right now. Am, I comfortable? Am, I confident? The answer to both is I'm caught off guard and the extent of the rally is obviously not what I was anticipating. Am I nervious....no...I would say more like Hyper Focus.
In times like these I revert to the Rules of Elliott Wave Theory.
Let me back up. As a young analyst, starting out my career and learning Elliott Wave I was taught to memorize the rules. Once the rules were memorized....Trust your count till invalidation. If invalidated, DON'T TRADE UNTIL YOU figure out what you did wrong. Oh and by the way, while your figuring this h&t out...don't lose a bunch of money. Survive.
So rule No.#27-A (that a euphemism for everything in my world Rule 27-A)
Wave 4's will retrace between .382 of a maximum of .50 of wave 3 but never overlap wave 1 unless in a diagonal. A retracement above 50% of wave 3 is not a wave 4. Your count is wrong.
The below chart shows the retracement levels from the start of wave 3 at the wave 2 top to the low yesterday in the overnight of the futures. Look where we are.
Am I happy....No. Did I Cover my short Oct EOM ES 3950 Short -5....No. I've learned panicking gives in to fear. With a 3950 strike I'm going to give this the maximum room to prove me wrong. My better judgement tells me from experience, this market is going to reverse from here or a somewhat higher level...and make new lows. I'm going to trust my analysis until proven wrong.
Today, between DM's and comments, most were lambasting me. I never claimed to be a fortune teller. Sometimes I am wrong. Am I wrong on this one....I don't think so based on the pattern I have in front me...but time will tell. Did the bears blink? Right now, all I will say is it appears all they did is lay a bull trap. Put/call ratio way down from yesterday...fewer people protected from downside. In my opinion, right where the market wants those people.
Reading your analysis and explanations are very thoughtful and calm. I really appreciate your work and candor.
vietto_de_niro
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haters gonna hate. Most will hate when they don’t hear what they want to hear. Thanks for sharing your great works, Chris
Steversteves
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My motto in this market is what takes the bulls 5 days to achieve, takes the bears a half a day to undo. I think you're fine ;).
Take care!
ubdrmade
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Still holding weeklies. Made my 1dte puts break even yesterday but thought the same….seems to be an accumulation to distribute. Caught the utad reject yesterday just wished they would have let it drop for my sanity🤣
mc_speculator
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agreed. closed all longs yesterday from monday and got short riot again today and stayed long rig
Peterson
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That is a textbook megaphone. Will see how it plays out.
maikisch
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@Peterson, my cup and handle feel in a descending triangle I’ll need that megaphone to call for help. Lol
morating
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@maikisch - considering how big this move is, do you still think this move is still a iv of 3 and not a 4?
maikisch
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@morating good question I’m torn on that I have to see the fibs we hit on the way down. But I posted a week ago we have 1 or 2 more 4-5’s to go. I’m leaning towards larger 4 but we’ll see
morating
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@maikisch - I’m leaning towards larger 4 as well. I’m also thinking 5 lands slightly below 3500 and that would only complete a larger wave 1 down of C. What are your thoughts on that? I’m thinking this because .382 retracement for this whole wave 4 decline from Jan high is around 3k, so there is a long way to go.