Friday, September 28, 2012

Charts 9-28: The Bearish Option

Oh boy ... we closed right at the intersection of two channels.

A gap down Monday means that the top may be in.  That would mean no 1500+ scenarios, no further blow-off, no top touch of the giant megaphone shape we have been building since 2000.

It could all be over.

The pop to 1474.5 on the QE3 announcement satisfied our requirement for a touch on the weekly and even the monthly upper Bollinger bands on the SPX.  Since then, we've drawn some messy waves, but isn't that typical of the crossed signals we see at tops?  They're not pretty, but they do have a legal E-W count.

The Three Peaks and a Domed House pattern I am tracking suggests that point 23 and the roof of the domed house may be in.

A rollover here could get things moving very quickly, giving us an epic market crash in Spring of 2013 -- SPX 400!

Good luck Monday!

You are here
Deep retraces line us up with SPX 970
C down, a 1.618 extension of the rally


Winter FL said...
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Winter FL said...

How are you playing this? Options? Futures? Did you position on Friday?

christiangustafson said...

Hi, Winter.

When I saw how anemic the market was on Friday, an end-of-quarter day, and that we would not pop over 1450, I bought some SPY puts.

I've given up trading any individual issues, and prefer SPY options. They're liquid and they track the market well. If the market catastrophe we call "C down" does indeed play out over the coming year, I will trade it almost exclusively with SPY options.

Chart SPX, trade the SPYs. Individual sectors may be pumped and rotated and pushed around; my aim is to trade the overall move of the market.

rd said...

I am also watching Carl Futia's 3PDH analysis.

He has us at point 21.