Taking some profits

That Bear Put Debit Spread which I wrote about a few days ago really worked out well. I bought the 2630/2610 spread for 4.15 and took my profits today at 8.00.

I am now watching two valid wave counts and the next few days will be very interesting. The bullish count is the triangle shown below which now should be in its final wave down before a big break to the upside.

The alternative wave count says that the big top is in and that the market now should accelerate to the downside.

For the triangle count to work, the market must not break below 2553 so that is the line in the sand for me.

Right now I am watching the market without having any swing trades on and just continuing to day trade!

Have a great day!

Office move and bear spreads

We have been moving into a new office for the last week and a half and I have not had any time for my writing 🙂

I have been day trading the S&P 500 and was very lucky in my IBM position which became very profitable in the end.

A quick update on the S&P.

I am currently tracking two counts where both of them are pointing to a top around where it is now. The first count is the triangle shown below.

And the second count is the more bearish one below.

Yesterday was not a very strong down day so I am still considering the possibility for the markets to move a little bit higher. I established a small Bear Put Debit Spread yesterday in the May 18th puts of the S&P 500 mini from 2630 to 2610.

Happy trading!

What a sick market!

The stock markets are really challenging the barriers of each Elliott Wave count that I am tracking 🙂

Let’s start looking at this morning in the Eurostoxx 50.

During Friday I established Bear Put Spreads in the Eurostoxx 50 by buying the 3375 put and selling the 3300 put in preparation for a fast break to the downside. My line in the sand for exiting the position with a loss was the high at 3433.81. Today the market rallied to 3433.68, 0.13 from my stop and then broke hard to the downside and I managed to stay with the position, how sick is that?

Now on to the S&P 500 in the US. On Friday I decided to track the most negative count as my preferred projection and today I established a Bear Put Spread for May down at 2450 to 2405. I usually don’t want a wave 2 to correct more than 78.6 % of the previous wave and during the latter part of trading today I was looking at taking the negative position off. I had the 78.6 % level as my mental stop and the market went just to it and then turned down so I managed to stay in that position too.

The alternative count for the S&P 500 is the following and tomorrow we should see which one pans out 🙂

I am on the short side for now but that could change in an instance, keep your heads up!

Probing among my wave counts

I am probing through my different wave counts in the markets and still, there are a few alternatives, why should it be easy? 🙂

Starting with the US and the S&P 500 yesterday saw price action according to what I thought. The first long-term primary count is the triangle as shown below.

The first alternative is a continued correction and then a larger breakdown.

The second alternative is more negative and would call for a top right here in the bounce.

The third alternative is a lot more bullish.

So, we have four good possible counts, what do I do with them?

Well, I go down to the very short term view and monitor for some confirmation of the various counts.

Primary count for S&P 500

The primary count was looking for a short-term top yesterday and a correction down in wave-(X). The market is looking down sharply overnight and suggests an opening around the 38.2 % retracement level so if the market gets some legs from there after the open then this wave count is very much in play and I would be looking to establish some Bull Call Spreads to take advantage of this.

If the S&P 500 breaks 2606 I will instead be looking for a more bearish wave count like alternative 2.

An interesting US stock that I have been trading from the short side is DowDuPont (DWDP) where I think that a top could be in the making and a Bear Put Spread could be in order or a Bear Credit Call Spread in order to cash in on some volatility premium.

Looking at Europe and Eurostoxx 50 the counts are a bit more difficult but I am looking for the count below to pan out.

Today should be a VERY interesting day so stay tuned.

Great volatility

This is a very interesting market with great moves to play as a trader.

Yesterday I closed out the Bear Put Spread in the Eurostoxx 50 with a small loss since it started to turn up during the afternoon so I am only day trading some Eurostoxx 50 futures to the upside right now.

In the US yesterday I came in long and took half of the profits in the Bull Credit Put Spread just before the close since we had such a great rally. The wave count that I was tracking yesterday for S&P 500 is shown below.

I think that the impulse wave shown above should top out around 2690. However, I have started to look at the longer term count below as the most probable overall count.

If I drill down to the 10-minute chart for this one the count is very similar just that the potential for the rally is a bit greater over the next few weeks.

In the chart below you can see how these wave counts interact with each other for various time frames.

From an options strategy perspective that I use for position trades I think that the coming correction in wave-(x) would be something to play from the long side. I will monitor the market now with my remaining Bull Credit Put Spread to see how it pans out and just do day trades in the futures until the picture clears.

Better lucky than good

Yesterday was a very lucky day and sometimes you need to have luck on your side!

I was watching the day closely to see if the downturn from Monday could get any traction but when it started to turn up from the US open I took my profits in CAT and IBM. During the morning in Europe, I had established a Bear Put Spread in Eurostoxx 50 so I had enough short exposure.

Just before the wave-(b) bottom in the chart below I established a Bull Credit Put Spread to play the bounce up to wave-ii (circled) in the chart below. Immediately after this trade, some news hit for Amazon and the market rallied.

I will look for a bounce up to 2645 – 2675 and depending on how the waves look I will position myself for the next proposed break to the downside according to the chart below.

The down day materialized

The potential for a good down day as I wrote about this weekend materialized and the S&P 500 broke down through the last meaningful bottom.

The volume was not that great as shown by the histogram below representing one day per bar.

So, we do not have large sellers yet and we do not have an environment that tells me that we have a bottom in place. The market is falling because we cannot find any large buyers and trading money is pushing the market down.

By taking out the bottom at 2585 from the 23rd of March the minimum requirements for the wave-(v) bottom is fulfilled so I took profits in the last part of my S&P 500 Bear Put Spread and I have a few put option positions on in IBM and CAT which I established about two weeks ago to capture the longer term decline. The wave count above is the one I am tracking as my main count but I also see a potential for the following count.

The count above is much more bullish and I am watching the action today closely to see if the break to the downside from yesterday gets any legs!

Stay safe in the markets!

Has another short term top been made?

On last Thursday I was too busy with other stuff in order to day trade the futures markets which I am thankful for 🙂

The US stock market melted to the upside all day and at the end of the day, I saw a complete 5-wave advance which I think was wave-c of the larger wave-(iv). I posted a Heads Up post on the blog before the close that I was establishing Bear Put Spreads again and the market then broke sharply to the downside.

The chart above shows the very short-term perspective which I was looking at on Thursday. Everything looks all set for a big down day on Monday, what if it does not happen? Well, I could not care less, I will just exit the position and re-evaluate. I trade the odds and I don’t have a bias, I am just as comfortable shorting for all I’m worth in one instance and then turn around and go long if I see a change.

Looking at the larger picture the best wave count right now is the following for S&P 500.

Happy trading!