Wednesday, April 17, 2024

Did Someone Press The Panic Button?

panicbutton

Holy Cow!  Did Wall Street hit the panic button today?  They sure fooled me on this one, as I didn't see such a huge sell off coming so soon.  I was stuck sitting in cash on this move.  Bummer!  This changes the game plan completely of course.  Yes, the turn date for Monday or Tuesday is still valid, but it looks like it started early.

If you are all ready short... stay!  If this caught you by surprise like it did me... pray for a bounce!  I was looking for a little bit of selling today, but mainly a flat day before one final move higher.  But, at least I wasn't long the market... man that would be painful.

Ok, moving on...

I see 2 different possibilities for tomorrow.  One is... A little more selling in the morning as the late-comers' sell on the news.  Then the big boys should step up and rally the rest of the day.  I don't mean a big rally by any means... only a small up to close the day positive.Two is... The numbers tomorrow isn't as bad as the market thought (government gets out their erasers), and we gap up a little and rally early on, and sell off into the afternoon.  Either way, I'm looking to get short.  The consolidation area that formed today was in the 107.25-107.50 spy level.  That will be hard to go through, and I might go short there?  The next level of resistance is around 108.30-108.35, as should be about as high as I can see the market getting.  I'll definitely be going short there.

Tony-Caldaro-60-minute-SPY-chart-02-04-2010

Either way it plays out, this would produce a smaller wave 2 up inside a larger wave 3 down.  That means that Monday (or possibly Tuesday) would have a smaller wave 3 inside a larger wave 3 coming!

If that happens... look out below!  We are going down hard and fast!  Wave 3's are the most powerful waves and when you have one wave 3 inside another wave 3... you've got a hurricane coming!  Now understand that we might not get a bounce tomorrow?  You know how they kept all the bears (and late bulls) from going long during the rally from last March.  It was almost straight up with no pullbacks to go long on.

Well, don't you think they will do the same thing on the way down?  Of course they will!  Any bounces are going to be small and won't last long.  I'd be shocked to see a 38.2% retrace from today's sell off.  I think we'll be lucky to get 23.2%.

Regardless of how high the bounce is (if there is one?) I'll go short tomorrow into next week.  I really expect it to be ugly.  All of next week should be down, with very little chances of getting short again.  We are rolling down on the daily charts now, the weekly charts, and the monthly charts.  It's not looking good for the bulls.  We will have some bounces along the way, but I'm expecting selling into March.

What I'm doing is simple... I getting short tomorrow on any bounce higher (with those targets mentioned above in mind).  Whether it coming in the morning, (which is possible), or in the evening, I'll be getting short and holding through all of next week, and maybe into option expiration?  It depends on how fast it falls and the key support levels it hits.  When it hits heavy support, I'll go to cash, wait for the bounce, and re-enter short for a continued fall into March.

Some of you might want to ride it out, but I swing trade and will be getting in and out when support levels are tagged.  This huge down day certainly has come as a big surprise to me, and to many others too.  That's exactly how they like to play it... catch everyone off guard!

Good Luck Everyone...

Red

Red
Author: Red

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BloodWine
BloodWine
14 years ago

Great Post Red!

I closed the day 87% in cash and plan to get in short again tomorrow. I hope we do get at least a little bounce!

BTW – there were 4 weird after hours ticks on the SPY 1min up to 109.88. Odds are we run in the direction of those ticks (up) at least in the early part of the day. Again… just odds, doesn't mean much.

Again… great post! Thanks for sharing your thoughts

Oh and LOVE the panic button – hahaha

Red Dragon Leo
14 years ago
Reply to  BloodWine

We are going down for all of next week, and possibly into opx the following week. I'm getting short tomorrow at the levels I stated, and staying short until next Friday. I'll re-evaluate the position then, based on what levels we hit.

dark1p
dark1p
14 years ago
Reply to  Red Dragon Leo

OK, Red, I'm a jerk. I was on some other sites earlier and got peeved because I'm a long way from convinced that the prevailing count is correct….and I go and pop off on Anna's blog. Then I come here and see that your count is matching up to the other guys I saw! I'm sorry, I didn't mean to sound like such an asshole. And I certainly didn't have you in mind when I posted.

Man, I should keep my big mouth shut sometimes…

Red Dragon Leo
14 years ago
Reply to  dark1p

It's hard to get them all right Dark. I missed out on this big move down because I didn't expect it until this Monday… so don't worry about it.

The daily's, weekly's, and monthly's are all rolling to the downside now. We are going down my friend!

BloodWine
BloodWine
14 years ago

Also, I think you and talked about the FXI long to about 40 last week. If we get a bounce in FXI tomorrow, that should be a sweet short. Or FXP if you like the inverse leverage. FXI could make a quick trip to 35.50 with no support.

g'nite

mobthehop
mobthehop
14 years ago

hong long… (red dragon).. thanks for sharing your thoughts… Just looked at options for FXI / FXP…. nice action….

monicadern
monicadern
14 years ago

Red, is it possible that the Monday/Tuesday turn date you are seeing is a huge move up (i.e. short covering massacre)? What makes you think it is down?

Red Dragon Leo
14 years ago
Reply to  monicadern

The daily's, weekly's, and monthly's are all rolling to the downside now Monica. I'm not looking for any serious bounce until we hit the 200ma (daily chart) around 1020-1030 spx.

Don't be fooled about Monday, it's not going to be bullish like it has for the last several months now. Times are changing.

monicadern
monicadern
14 years ago
Reply to  Red Dragon Leo

Thanks Red – still holding even though my tail is in between my legs!

Red Dragon Leo
14 years ago
Reply to  monicadern

I waited all day for that bounce and didn't think it was coming. So, I got in at a lower price then it closed at, but I'll still be ok. I can't see anymore then 1080 tops on Monday, and then more selling. Hold on tight girl… it's the pop before the drop!

moon
moon
14 years ago

1063 was a big event closing above – seems like we have reach a short term bottom. We will see exited my shorts today – will watch. Hope your right red as I have no dog in fight right now. Did not wish to be a pig when down was down 130 or so points I bailed.
A good 2 days have a good weeked

Red Dragon Leo
14 years ago
Reply to  moon

We've started a larger wave 3 down, that should have 5 smaller waves in it. The smaller wave 1 was from about 1105 to 1044 today. Smaller wave 2 up shouldn't go past 1080 on Monday, and then a smaller wave 3 down inside of a larger wave 3 is coming next. I'd get back short Monday on the bounce up. We're not done with the selling yet moon.

moon
moon
14 years ago

1063 was a big event closing above – seems like we have reach a short term bottom. We will see exited my shorts today – will watch. Hope your right red as I have no dog in fight right now. Did not wish to be a pig when down was down 130 or so points I bailed.
A good 2 days have a good weeked

Red Dragon Leo
14 years ago

We've started a larger wave 3 down, that should have 5 smaller waves in it. The smaller wave 1 was from about 1105 to 1044 today. Smaller wave 2 up shouldn't go past 1080 on Monday, and then a smaller wave 3 down inside of a larger wave 3 is coming next. I'd get back short Monday on the bounce up. We're not done with the selling yet moon.

monicadern
monicadern
14 years ago

Thanks Red – still holding even though my tail is in between my legs!

Red Dragon Leo
14 years ago

I waited all day for that bounce and didn't think it was coming. So, I got in at a lower price then it closed at, but I'll still be ok. I can't see anymore then 1080 tops on Monday, and then more selling. Hold on tight girl… it's the pop before the drop!

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