Oh, man, what a day! Even if I list this route on my chart yesterday, if you tell me we are going straight down in 2 days to 4400, I would have my doubt. Overnight market hit 4454.5, 4.5 points from my bottoming range, but then it rallied toward 4520.5, above the 4511 low made yesterday after CPI report. At that moment, I really thought the drop was over, and we are only making a higher low next, RTY consistent strength over ES during the morning pullback only strengthened my thought. So I kept trying adding short swing calls on every possible micro bottoming structure in the morning and kept getting stopped. Only after Russian/Ukraine news is released, and market start clearly trending down, I stopped that, and soon exit all calls once overnight low was taken out. Thanks for the hedge puts bought this morning at 4495 and 4515 and one more got yesterday, all the loss on the calls was covered, but I have to admit, this is a very tough and confusing run, market structure is much less clear than yesterday to me.
So now we have already hit the very bottom of my 4390~4450 range, what's next? Well, I would like to say I believe this (B) wave is completed, since we have a seemingly 5 wave down from 4585 high two days ago, and hit the good support zone, everything is perfect, right? But the last 2 hours of market hours isn't strongly supporting that idea, as market is doing drifting down but with lower high/lower low, no real strength/reversal at all. So yes, as this is still my current primary route for now, what I need to see is a quick reversal Sunday night (could still potentially make a spiking low toward 4370~4380 range, but need to reverse up right away), and reclaim 4450 minimally and better 4470, printing a higher low Monday and continue up. On the other hand, if we do not find support and continue down, there is a previous fractal that would see Sunday night/Monday as very ugly, and we could go straight down below 4300 if that happens. Check 09/20/21 and you will know what I am talking about. So while I still believe we are finding solid support, and I don't trust any news driven drop, I have added the hedge puts at end of day to protect my calls accumulated during the last 2 hours. After past few weeks, I believe everyone knows why B wave means bad, it is subject to sudden reversal at any time, and would easily trigger panic sell or short covering rally, so if you are trading this zone, please lower your sizing, keep hedges, or completely wait it out, we will revisit Jan low in the next 4~6 weeks, and a bottoming structure there could point to a multi-month, 1000+ points upside run, which will be far easier to trade.
So now we have already hit the very bottom of my 4390~4450 range, what's next? Well, I would like to say I believe this (B) wave is completed, since we have a seemingly 5 wave down from 4585 high two days ago, and hit the good support zone, everything is perfect, right? But the last 2 hours of market hours isn't strongly supporting that idea, as market is doing drifting down but with lower high/lower low, no real strength/reversal at all. So yes, as this is still my current primary route for now, what I need to see is a quick reversal Sunday night (could still potentially make a spiking low toward 4370~4380 range, but need to reverse up right away), and reclaim 4450 minimally and better 4470, printing a higher low Monday and continue up. On the other hand, if we do not find support and continue down, there is a previous fractal that would see Sunday night/Monday as very ugly, and we could go straight down below 4300 if that happens. Check 09/20/21 and you will know what I am talking about. So while I still believe we are finding solid support, and I don't trust any news driven drop, I have added the hedge puts at end of day to protect my calls accumulated during the last 2 hours. After past few weeks, I believe everyone knows why B wave means bad, it is subject to sudden reversal at any time, and would easily trigger panic sell or short covering rally, so if you are trading this zone, please lower your sizing, keep hedges, or completely wait it out, we will revisit Jan low in the next 4~6 weeks, and a bottoming structure there could point to a multi-month, 1000+ points upside run, which will be far easier to trade.
Comment:
We got 2 resistance zones above:
1) 4450~4455, noted 4454.5 was the overnight low of Thursday night.
2) Around 4490~4500, which is the line connecting Feb 4 and Feb 8 low, was support, now it's resistance.
If we break Friday low in a sustained manner, beware, 09/20/21 fractal could be in play, and we could open 100 pts lower...
1) 4450~4455, noted 4454.5 was the overnight low of Thursday night.
2) Around 4490~4500, which is the line connecting Feb 4 and Feb 8 low, was support, now it's resistance.
If we break Friday low in a sustained manner, beware, 09/20/21 fractal could be in play, and we could open 100 pts lower...
To me, Sunday/Monday's action will be the key on the future projection, please remain sort of delta neutral for that, as it could be 100+ pts of swing, should know better after we see Monday's movement.