Open To Being Fabulously Wrong

Earlier in the week, I mused that the mess is spreading.  I had to say it, because it was too easy.

The J.P. Morgan mess will spread too. 

Enter today's New York Times:

JPMorgan’s Trading Loss Is Said to Rise at Least 50%

The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses.



The Wall Street Journal chimed in today as well:

Spain Urges EU to Provide More Support

MADRID—Spanish Prime Minister Mariano Rajoy Wednesday urged the European Union to provide more support for the bloc's fiscally frail members as borrowing costs for Spain and Italy rise to worryingly new levels amid speculation of a Greek exit from the euro.


"Urge" is never a good word when you're trying to inspire confidence.  And the problem within the European Union is that there are too many fiscally frail members.  Germany can't, won't, and should not continue to support the failed experiment.  But it likely will for a while, because the persistence of the dream must not be underestimated.  We're talking about a common currency plan that was hatched behind closed doors that was meant to be the model for the rest of the world.  The arrogant kooks that hatched it do not give up so easily, but they will have to in the interest of self-preservation.

The current wave count suggests we are in a strong 3rd wave down.  The problem is that it doesn't feel like it.  For this count to remain valid, we should be down at least 40 points on the S&P intraday.  The longer the market hesitates, the more the wave count becomes suspect.  I expect a bounce, and yesterday I put money and time value on it.  My short position has finally caught up with the carnage that my previously purchased calls have experienced.  Since they're expiring this Friday, and so as not to add to my risk exposure this week, I purchased SPY 134 calls expiring June 16th.  Should I wish to purchase more, I will do so with SPY weeklies (expiring next Friday) which should be available this afternoon.

Obviously, if the market chooses to validate the 3rd wave, I won't be adding anymore calls for a while.  I'd be quite happy not to.  However, if the count should fail as I think it will, I've raised my target to 1360-1365.

If I'm wrong, I will be fabulously wrong.