Monday the market is closed in observance of President's Day. Accordingly, this will serve as our Weekend Update, subject to any special Alerts that may be posted tomorrow, Friday, as per market conditions. Since the January 26th major top in the equity markets, "market conditions" have necessitated a larger number of updates than usual, so keep an eye out for any special Alerts in your email boxes and/or posts under, "Market Updates," at the Blue Line Trading website.
The volatility of the past two weeks is consistent with major changes in market trends. We have a steep 10% dive, followed by an almost as steep 5% rally. The probabilities strongly favor a continuation of the dive due to two compelling evaluations:
(1) It is highly unlikely that a reversal in the Intermediate Term trend, as we had on February 2nd, will last only five trading days. More than just unlikely, it is preposterous.
(2) Pattern recognition analysis (which is basically Elliot Wave theory) allows for exactly what we have seen the past week, a partial retracement of an initial leg down. Being Short across the board, even with stop-outs on our options) makes retracement difficult to sit through, but if the market were easy there would be no reason to read, or write this.
Key Read: Weekly Sell Signal on the Dow
Key Read: The SPX found support just below its monthly Sell Signal level. See Feb 12th: "Where Everything Becomes Just Noise"
It's pretty clear how the lows shown above, 23,300 on the Dow and 2,530 on the SPX are extremely important. A break below is endgame for the 2009-2018 bull market and time to get aggressive on the Short side. We will be going for the fences.
GBTC reversed back Long on Thursday. It is running with bitcoin, as it should. It's just a little troubling that bitcoin is following (or leading) stocks as it would be nice to have two totally independent trading models. On the other hand maybe they are totally independent, and just temporarily moving together.
If nothing needs to be posted tomorrow, enjoy the long weekend ( actually enjoy it even if I do post something).
Note UVXY hit its stop on Thursday. For the time being, I'm holding mine, there is too much to gain should the analysis above be correct. A new stop is posted based upon its 240 minute trend line. If you stopped yourself out, I will bang the table to get fully invested when it's time.