Shots Fired

The name of this post popped into my head the moment I woke up.  And I've been waking up earlier lately by eating more during the daytime and less at night.  It's really helping me wake up clearer and more refreshed.

Shots were fired across the bow of the SPX Titanic yesterday.  Not only did the triangle fail at 1346.45, but both 1335.32 and 1327.28 did too.  I hadn't even mentioned the latter number because it was so far away.  But in doing so the S&P nearly closed off the impulsive bullish option completely.

To completely close it would require still require 1306.62 to fail, but I'm willing to stick my neck out and show the following chart which I posted yesterday on Twitter:

Bear in mind the price levels may be inaccurate, but the a-b-c form is what it seeks to convey. It suggests a deep retracement below 1306.62 (but not required) then a ripper of a rally back above the 1363 highs. Could it rally back to the 1380 mentioned yesterday?  Sure.  It could go to 1400.  But the message would be the same.  3-wave rally after 5-wave decline.  Bear market.

The point is, the market spoke very clearly yesterday. If this pattern is correct it will give bulls a very graceful exit.  The next move would be hundreds of S&P point lower.  Yes.

I stupidly sold out of my SPY 134 puts at even yesterday after being down 50% and then watched them go up by 100%.  Thankfully I kept the VIX 24 calls.  I also bought SPY 134 calls around 1340, so I can't say that while the market spoke clearly I heard it properly.  These things happen.  And hopefully they only happen when using the limited risk of options.