SPY
The key level going into the last half of March is the 500-505 range on SPY. If 505 goes, I'm assuming 500 does as well, so we will use that as a trigger to buy May Puts in the Premium Service.
If the break is severe, April puts offer outstanding leverage, but also increased risk if the break is quickly recovered.
Trade Alert: On a SPY close below 505 and especially below 500, Buy May and/or April SPY Puts highlighted in these two tables above - 50% trailing stop on any new positions.
DJIA
We don't trade DJI options but the Dow is a useful gauge for big picture analysis. A yet to be seen new red down arrow will lead to the first Dow System Sell Signal of 2024 in this bellwether index and will coincide with a like signal SPY and SPX. That would be enough of a consensus to buy May and/or April puts, especially if IWM follows suit:
IWM
Trade Alert: Buy IWM May 17th $195P - Use 50% trailing stop.
Bitcoin & BITO Calls
Bitcoin - Down again Saturday morning, breaking below $68,000 before a small recovery. Where will it be at Monday's stock market open?
The March $23C went off the board with a 615% gain and the remaining Jun calls still not stopped out, but getting closer. Worst case, Jun calls get stopped well above 200%. In a bona fide stock market turn-down these will be commonplace returns in stock market index puts.
TSLA - Weekly
Only one word for this Weekly chart: Ugly
Speaking of Ugly: Guest Chart of The Week
One last chart for this weekend, uncovered Saturday morning but well worth study. Key takeaway: The market is now in a position where any break of key support, or fresh system Sell Signal, should be acted upon.
]]>
Trade Alert: On a SPY close below 505 and especially below 500, Buy May and/or April SPY $495 Puts - 50% trailing stop on any new positions.
Trade Alert: Buy IWM May 17th $195P - Use 50% trailing stop.
More details, charts & discussion in the Update.
]]>First, our current positions as they are priced mid-day Tuesday:
If Bitcoin drops this week the 50% trailing stop could kick in and exiting March calls will result in a gain of about 375%. If so, hold off any new purchases, that would be a red flag that a deeper correction, or worse, was unfolding.
Absent that kind of decline, exit the March 15th calls before expiration on Friday and replace some, or all, of those calls with these highlighted April 19th near-the-money strikes:
If holding both Jun and March calls, consider banking most of the March call proceeds and riding the Jun calls the rest of the way. I'll leave that to your own personal risk:reward tolerances, but what was once a modest bet on Bitcoin calls has grown to moderate to large bet (about 8X for March, about 5X in the Jun series), mostly all profits.
Bitcoin Charts
These EW charts allow for Bitcoin to reach much higher levels before a completed 5-wave sequence is due for a serious correction. A Bitcoin target of $100K+ would place BITO close to $50.
SPY Alert
A hard close below the uptrend line coming up from the Nov 2023 lows will be the first indication that something more serious is happening on the downside.
A subsequent close below 505.00 will likely trigger our next foray into SPY puts. If the trend channel gets broken in the next few days, look for an action alert for SPY puts to be posted on any close below 505.00 and especially below 500.00.
Bearish Early Adopters
10-Year Gov't Yield - Headed Higher
]]>
Two outstanding Buy Signals grace our still open Options Tables, the Buy Signal for Bitcoin and BITO calls of February 12th and the Buy Signal for Gold and GLD calls of March 1st.
GLD & BITO Option Trades
Bitcoin
One way to look at this EW set-up: Either the top is in (five waves complete) or, its going to $100K by summer.
BITO
Up 642% and 342% respectively, the March and Jun Bitcoin (BITO) calls are our best trade of 2024. Protect gains with a trailing stop, if those two returns get cut in half, take some or all profits. We will be rolling over the March BITO position into April calls sometime next week.
Gold
GLD
Like Bitcoin, Gold shows alternative scenarios, one of which is for much higher highs into early summer. I don't think that is a coincidence, its more like speculative fever or somebody knows something is brewing and is buying alternative financial assets.
]]>
Special Note from Allan
I don't mean to "over-post" but we do have a 650% (at its highs) trade on and I want to emphasize trade management before it slips away, Everyone can manage trades on their own, key word: manage. Whether using the 50% trailing stop, or taking and banking partial gains along the way, it all works to mitigate losses and preserve gains. We are getting enough of these huge winners in this service to develop a plan to manage them when they come. Don't expect to squeeze ever dollar out of every win, but make sure to walk away with something, every time, using "half of best' as a benchmark.
Our best trades of 2024 are still ahead. Rant over, kudos to all who bought the BITO calls. More to come.
Allan
Bitcoin/BITO
Bitcoin made an all time high a few hours ago, then tanked, so watch out for a knee-jerk retracement. Our 50% trailing stop kicks in if the "Best Return" percentage is halved from its best levels. Worst case is we bank half that amount and re-deploy upon new rally. I can live with that. Bitcoin is already down $4K off the new high. Anything is possible, but $78K - $102K still looms above as a completed 5-wave advance target.
Bitcoin
Option Prices Mid-Day Tuesday
Alternatively, the new high was a "hook" to draw in the FOMO crowd before Bitcoin gives is all back ("all" being undefined for the moment). Again, that is why we draw the line at giving back half our gains on the calls. It is also why we keep a keen eye on the stock indices because if Bitcoin goes, so goes AI and the the rest of the technology sector.
SPY
No doubt about it - we will be buying puts on first close below SPY 500
SPY Apr Puts
GLD - Let's not forget, from last Friday's Into The Close also subject to 50% trailing stop.
Remind anyone of Bitcoin?
]]>
Bitcoin
BITO
Caution Still Warranted
Nonetheless, caution is still warranted. In the crypto world anything is possible, especially over three day weekends and/or while we sleep, so maintain 50% trailing profit stops on all positions and alternatively consider taking some profits while at the same time rolling up to higher strikes or further out expirations. For tracking purposes, we will stick with our original picks (below). If this rally continues much longer we will roll the March expiration into April.
Premium Service Bitcoin Calls (late-session Monday)
Late add: TSLA SPECIAL ALERT
Exit Calls (currently -25%) on a close below $190
]]>New highs in the market indices did one thing for this service, it generated massive gains in our Feb 10th Weekend Update Buy Signal in Bitcoin. Late Friday we sent out a new Buy Signal for Gold (GLD), using the same dual option expiration strategy as we did with Bitcoin/BITO, i.e., trader's choice. As for the stock market, without a follow through to the downside in the market averages, opportunities have been limited with some modest losses using trailing stops. TSLA finally generated a Buy Signal in both short and intermediate term models last week. However, without immediate follow-through this doesn't (yet) have the right "look" for third wave. Nonetheless, as long as $190 holds, we will give this up arrow time to unfold as the reward side of this particular option bet is huge.
Bitcoin/BITO
The run-up from the February Buy Signal is exactly what a third wave follow-through rally should look like. Bitcoin was up about 50% in two weeks going into the end of last month, generating as high as 500% wins in some of the recommended options. Mea culpa for my not liking this signal at the time, but I recommended BITO calls anyway. For what its worth, I don't like this TSLA action either, and still am recommending TSLA calls. Let's see if my gut feel can go 0 for 2.
GLD - New Intermediate Term Buy Signal
GLD triggered a new Buy Signal in its Intermediate Term Model at the close on Thursday. Before I could get a "Buy Pending" out, this signal was confirmed via a 2% rise on Friday. We are going out of the money and into April or Jun on this trade, as always, using a 50% trailing stop to protect positions.
Aggressive Traders - April Calls
June Calls
The Big Picture - Stock Indices
The Greed & Fear Index is back in the Extreme Greed zone, and the price action is topping across almost every measure and index. It's not a time to go long much of anything and in fact a time to monitor our signals and key levels for reasons to go short. Let the Bitcoin gains give some solace here, as when their time comes stock index puts, whenever the month turns out to be it, will more than compensate for the wait. Event risk is high, as is stretched out sentiment, cycles and a slew of non-confirmations. Everything that matters is screaming deep-dive ahead, at least everything except for the actual dive. Watch for it.
QQQ
Moving into next week the closest Key Level for QQQ is a break below 435.00. We will be monitoring closely for an sign that hard break is forthcoming at which time we will be recommending new positions. The Q's can drop 100 points in an event driven crash, or, can keep on truckin' higher, but the real payoff would be with the former, not the latter.
Tesla (TSLA)
This is the least confident Buy Signal I can remember for TSLA, and that is going back to 2019, maybe beyond. The lack of follow-through in upside momentum is concerning, but, it is countered by the abject bearish sentiment on the electric vehicle sector. Take a look at a chart of the EV sector recently published by EWI, a long time EV sector skeptic:
Another way to interpret such a dire view is that TSLA is cleaning the clock of everyone else in the sector. Sign-up for a Cybertruck today and the estimated wait is about four years to delivery. That isn't a marker for stock collapsing much further than the 50% TSLA has already declined from its all time high. If the shares are going to new highs, our Buys will be on board for most if not all of that ride. If not, risk is limited by trailing stops, while we look to Bitcoin and stock indices for mega option rewards.
TSLA - Longer Term Perspective
The alternating red/blue arrows are the trading signals generated from our Intermediate Term Trading Model. Take-away is that no big moves occurs without a corresponding signal preceding it and for now, that latest signal is a Buy Signal on Feb 27th. Any close under $190 brings this signal into doubt.
Recent Trades:
]]>Buy Signal for GLD Apr 19th and/or Jun 21st calls; 50% trailing stops to protect profits and limit losses.
Note: Huge relative volume on Jun $200C.
]]>Both positions are now locked in for triple digit gains via the 50% trailing profit stop strategy. Alternatively, take profits now and roll some of the gains into new positions with higher strikes and/or further out expiration. Best bets mid-session Wednesday:
As for TSLA calls and/or stock index puts, their time is coming. As stated earlier in this update, we just don't know exactly when...but have no doubt, their time to shine is coming,
Note: The Bitcoin move from the mid $40,000 Buy Signal is up 50% in just a little over two weeks, in other words, NVDA on steroids. Call it a bubble, a mania, or maybe a market tell that this ferry tale rally is coming to an end in all speculative sectors. In that case, we will be looking to stock index puts for our next big winner. Just saying...caution warranted.
Bitcoin
BITO
]]>
"Both Bitcoin and BITO (ProShares Bitcoin Strategy ETF) have confirmed Buy Signals in their respective trend Models. Charts below. Accordingly and against every skeptical bone in my body, I am recommending BITO calls for an intermediate Term trade. After all, when it comes to our trading signals, a signal is a signal and a trade is a trade. 50% trailing stop, target, new Bitcoin high(s) (> $69,000; BITO > $40), later this year."
"BITO: target above $30 by Jun expiration; above $25 by Mar expiration, use 50% trailing stop to limit losses and protect gains. Past performance is not a guarantee of future results."
2-Week BITO Call Performance
Bitcoin
BITO
As of Monday's close:
Intermediate Term Buy Signal confirmed on a TSLA daily close above $200.
The expected move here is well into the $300's in 2024, making January 2025 out of the money calls the best bang for the buck. Use a 50% trailing stop, or a TSLA close below $190 to exit.
TSLA JAN 2025 Calls
With a close above $200 any call on this table works for an expected third wave higher, well into the $300's by Jan 17, 2025. Trade canceled with a close below $190.
]]>Digital World Acquisition Corp (DWAC)
Call this a long shot, but without being political about it, this Special Purpose Acquisition Company offering may be the story of the election year. Click each of these two links below for details:
Donald Trump just got the green light to return to Wall Street
Truth Social Worth = $4 Billion
In other words, love him or hate him, this is an option opportunity where puts/calls can go up 10X+ between now and the November election. I am not advocating either way just yet, but I am bringing DWAC to every option trader's attention because of the potential in both directions. Best case is the half of the country that voted for Trump in 2024 decides they want in and these shares soar in the months ahead. Think NVDA a year ago, under $200 (recently $800).Worst case, the gathering political storm works against anything Trump-related in the lead up to the election, driving these shares back down to intrinsic value < $10. Either one of these scenarios becomes an option lottery ticket and in fact, owning both a put and a call, either of which goes up 10X or 20X depending on outcomes, becomes the pairs trade of this election year, where worst case is that nothing dramatic happens to the Trump candidacy in the months to come. How likely is that?
DWAC - Daily Trend Model
Currently on a Buy Signal from November, 2023 @ $16. Potential market = 74 million ("more or less") Trump voters crowding into these shares if and when Truth Social goes public. Downside is it returns from whence it came, back below $20 if and when anti-Trump forces align to take down the company. Note: Special Shareholders Meeting March 22nd, ergo: Apr options.
DWAC - Fibonacci & EW Extensions: Bull Case - A fresh leg up to $140-180 possible
The South Carolina primary is Saturday. A big up day on Monday for DWAC makes this EW/Fib projection something to think about going forward, especially with the scheduled March 22nd shareholder vote to take Truth Social public. DWAC can run as high as $180-200 or as low as $10-15 in 2024's political theatre.
If DWAC gaps up on Monday we will take a serious look at these calls. For now, they remain a curiosity, (unless anyone is feeling particularly frisky). DWAC went public in 2021 @ $10/share.
Huge spreads between bid and ask are typical for meme stocks, but those spreads will come done as news of this merger and the effect of the election manifests on DWAC's value, particularly as it becomes fodder for daily political commentary. I have only been following these options for a couple of days, so let's see how they trade before evaluating the opportunity. Essentially, the shares could soar, or crumble and it would be nice to have a stake in whichever side prevails, without having to take sides in the election.
TSLA - Still on Intermediate Term Sell of Jan 5th.
This is the Daily, i.e., Intermediate Term, Trading Model. The Short-Term Trading Model (not shown) triggered Long on Thursday, but it will take a close above $200 to confirm the Long trade. A close back below $190 makes this Short-Term "Buy Pending" questionable. In other words, TSLA below $200 is not actionable for either model.
]]>
PANW: Feb 21st Earnings Crash
NVDA: Pre-earnings.
Unless otherwise noted in these updates, QQQ is a short on a close under 425 (buy Apr 19th $400P), and TSLA is a Buy on any rise above $205 (calls to be identified if and when).
QQQ - Daily Trend Model --> Sell Pending
Strikes: 410-390 = Sweet spot for Apr Q Puts if a worst case scenario unfolds.
TSLA: Buy Signal is still only Pending, needs to close strongly above signal line.
VIX: Higher highs; higher lows
Bullish for VIX, Bearish for stock indices. This pattern keeps us leaning toward a hard down spring for stocks and especially QQQ.
]]>
This chart epitomizes the first six weeks of trading in 2024 and is providing the basis for our next high risk high reward option play.
SMCI
SMCI opened last week at $760, ran as high as $1077.87 on Friday, then fell to close at $803.32. That round trip excursion ended Friday down 25% from its high print. For a service that prides itself on pattern recognition, this price action of one of the the AI darlings is similarly set-up as typical of other stock market manias, all of which ended badly and there is absolutely no reason to believe this one will end any differently. If our timing is correct, mega option returns are probable.
Guest "Ugly" Chart: From Robert Prechter, Elliott Wave International
Accordingly, as we go into the end of February and into March, my goal will be to identify "crash" worthy bets not unlike what SMCI showed with its turn-around on Friday. On first scan over this weekend, there are plenty of candidates and almost all of which are part of one index: QQQ.
QQQ Daily Trend Model
Above is the QQQ Daily Trend Model, it's reversal signal price level sitting at 425.34 this weekend. It will take at least one close below that price level to trigger a QQQ Sell Pending set-up, with an actual confirmation coming with multiple closes below that level. Alternatively, we can swing for the fences and start buying QQQ puts on Tuesday. That would be my preference, a gradual dollar cost averaging into April 19th QQQ puts because it just looks ripe for a crash. Reason enough? I think so. You don't have to bet the farm, not yet at least.
QQQ 180 Minute Trend Model
This is a more aggressive approach, using a shorter time frame for our trigger trend model. In this case, the 3 hour price bar intraday model that is often early, right or wrong, but this weekend it is sporting a fresh Sell Signal red arrow generated on the close Friday. Reason enough? I think so.
QQQ Hourly
Last but not least, above is our shortest-term QQQ chart, hourly, with Fib projections that come into play once QQQ closes below 425.34. As you can see, the immediate drop expected in the ensuing 30 days is to well below $400, setting up anywhere from 5X to 10X on April expiration strikes.
On Tuesday these April 19th $400 puts will have 60 days to play out. If QQQ drops to $370 they will be worth at least $30, for an approximate 10X return. Remember, all this is predicated on a stock market mania coming to a crashing end. Reason enough to roll the dice? Putting all the pieces together, I think so.
March 15th Expiration - If Tuesday is hard down out of the gate - Aggressive Traders Only
If next week is higher rather than lower we will likely get a fresh Buy Signal in our TSLA Daily Trend Model. Since we trade this model regardless of our market opinion, such a signal will mean a new set of TSLA calls. Note that price is already trading above the signal line, but no signal has been forthcoming, That will not last much longer, any new strength in TSLA shares will eventually generate a new Buy, it's what the model is built to do. (Note: Wave (3) projection is close to double current share price.) Based on what the rest of the Nasdaq has been doing, staying flat TSLA has been fine with me. There is a run to all time highs ahead, but a market crash may be on deck first. We should know by this time next week.
Something wicked this way comes:
Note: NVDA earnings due out Wednesday, this WILL move markets.
Note: Preliminary Sell on at Friday's close.
]]>
The action has been fast and furious in the both the stock and crypto markets over the past few days, so before it gets too far away let's take another look at Bitcoin and the recommended calls from the Weekend Update.
Bitcoin
BITO
BITO Options
The recommended calls for both the BITO June and March expirations have spiked nicely higher along with Bitcoin and BITO since the Weekend Report. As both calls have risen well above 50% out of the gate, this trade should have happy endings, locking in positive returns using a 50% trailing stop. Anything is possible though as crypto's trade overnight and on weekends, so consider taking gains along the way, even if limited to initial investment returns. The Fibonacci extension tool is projecting much higher prices for both Bitcoin and BITO in the weeks ahead and only a Bitcoin reversal back below round number support @ $50K would cancel out such projections. For latecomers, absent such a turn down, it is not too late for new entries into either or both of the above two calls.
BITO March Calls
BITO June Calls
]]>
IWM Intermediate Term Trading Model
April 19th $190P @ $4.00
If IWM hits its Wave 5 Fib target shown on the above chart, i.e., 152, the April 190P will appreciate 10X, as will all of the puts shown in this table. Going out to April monthly expiration allows for our timing to be off slightly and still achieve 10X returns on speculative puts.
IWM March 15th $195P @ $4.00
From the Jan 31st entry these puts are still attractive for a minimum 5X return, but IWM has to turn down hard and stay down through Mar 15th expiration, still 31 days away. April monthly expiration puts would be more forgiving if our timing is off.
IWM March 15th Puts (4 1/2 weeks until expiration)
One Last Thing: US 10 Year Yield
Breaking out?
]]>Bitcoin Intermediate Term Trading Model
BITO
BITO: target above $30 by Jun expiration; above $25 by Mar expiration, use 50% trailing stop to limit losses and protect gains. Past performance is not a guarantee of future results.
BITO Calls - March
BITO Calls - Jun
Marking time, making a mega top and playing with market participants fear of missing out, all typical and historically reliable markers of bull market ends...not beginnings. Payoff is coming, if not this month than next.
A third wave down is still the preferred set-up, but an IWM rise now up above the December 2023 high of 205.49 breaks rank with any kind of bearish pattern recognition scenario, including wave count shown above, which would likely have us loading up on TSLA calls in short, intermediate and/or longer term time frames.
Speaking of TSLA, price is moving close to an actionable trigger, as shares are probably just a few dollars and/or days away from a fresh Trend Model Buy Signal
TSLA
]]>
IWM Daily Trend Model
The other stocks highlighted in the Weekend Update are all being monitored for potential new option trades, but right now, an hour before the close on Tuesday, IWM Mar 15th Puts remains a best bet for new money.
]]>AAPL
One would have expected a Buy Signal toward the end of last week, but instead, it looks like new lows are due into the mid-160's. We need a close below 185.00 to trigger the trade. Going back to January 2017, this trading model's signals are 52% winners, but the winners twice as large as the losers, so the numbers favor taking every trade.
BA
A close below 205, or better yet, 200, triggers a short with an initial target of 175. Much lower prices are possible, so we may want to go out to April on this one.
MSFT
Another one of the market darlings survived earnings last week, the perfect fake-out for bulls. A decline now below round number support @ 400 suggests 370 possible in 30 days. Note that of these three short candidates, MSFT is the only one not already on a Sell Signal. When it triggers (down red arrow), I'll post the trade here.
That's three of my favorites ready for a fall. There are more, but am saving a couple for the PRO Service on shorter term time frames. As is often the case, I'll add the best of the lot to the Premium Service once the longer term set-ups are complete and confirmed. In addition we will have fresh IWM puts in both services that are holding their own. Event risk is high, the world appears to be going to hell in a hand basket and then, there is the US election. Maybe the worst is holding off until after the Super Bowl, our last great national holiday.
Finally, we have been right to stay away from new TSLA calls, respectful of the Jan 5th Sell Signal. Everything is starting to point to something big and swift to the downside, then a recovery.
TSLA - Daily Trend Model
Big Picture Trade: IWM
If this IWM chart looks a little different its because I've taken the liberty of adjusting the targets for Waves 3 and 5 to one Fibonacci Extension degree lower than on the previous charts. Likely or not, its possible.
Longer Term Expiration & Strikes
]]>
We will take this one day at a time, as if the longer term patterns are correct, there will be months of decline ahead, well into spring and/or summer, to say the least. Once the downtrend is confirmed by all indices, which could happen in a matter of days, we can begin to look at some individual stocks for short ideas (see BOTZ below). The run-up into the recent highs means many stocks are overextended and ripe for precipitous falls.
Stay tuned, it's only just begun.
IWM
SPX
QQQ
BOTZ (Global AI & Robotics ETF) - Sell Pending
Weekly
Daily
Shorter-Term Look
June Puts - Optional Trade Pending
At a minimum, BOTZ should retest the Oct 2023 lows around $22.26. That projects the June 21st $30P to 8.00, or approximately 4X its current price. Worst case, a test of the Oct 2022 low at 17.33, projecting the June $30P to $14 for a 7X return. Despite all the excitement surrounding AI and Robotics, this once darling sector IPO'd at around $14 in 2016, topped @ $40 in November 2021 and it's not done correcting.
Note: Dearth of volume and Open Interest is not ideal for trading, will be monitoring for the next few days before a formal recommendation.
]]>As for TSLA, it has given up early gains today which suggests the current decline, triggered by the Jan 5th Sell Signal, may not be over.
TSLA Daily Trend Model
IWM
BA - Poised for a slide...
...but not in front of the FOMC meeting
]]>
Our last word about TSLA was Jan 10th @ $235 wherein a fresh Sell Signal put any thought of buying back calls out of the picture. Since then, TSLA has fallen well below $200, keeping any call buying in abeyance until we have a proper set-up, a fresh Intermediate and/or Long Term Buy Signals. The fundamentals, though tarnished in the financial media, remain stellar, but let's get all the irrational selling out of the way before our 2024 Stock of the Year does what it always has done, surprise the pants off of everyone to the upside.
TSLA Daily
TSLA - Long Term
Even in bearish trends Buy Signals generated by the Trend Model have been good for several hundred percent gains. So long as losses are kept at 50%, over the long run this is an excellent stock for calls.
IWM
This IWM chart remains the clearest picture of what is unfolding from a big picture point of view. As described Thursday, a close below 194.00 will trigger a new trade to the downside in the IWM Mar 15th $195P, with strikes as low as $190 all attractive for a new leg down. This move will indicate at a Wave 2 retracement has ended while a third wave down begins. Anything less than a clear breakdown means that either Wave 2 is extending sideways, or, its not a Wave 2 at all.
SPY Long Term: Classic - Five Waves Complete
Sometime later this year we will look back at this SPY chart, smack our collective heads and say, "Of course, this was a top, five waves up, touching the upper channel trend line and reversing lower." The only thing missing is the reversal lower. It's coming, that's why I am so focused on a trigger. For now, IWM is the closest tell we have, it just hasn't spoken, yet.
Until this index drops to below 25 the risk in trading anything to the long side far outweighs any short-term rewards.
Interest Rates: Canary In The Coal Mine?
10 Year Yield
The 10 Year Yield (US Treasuries) looks poised for another run at 5%. If so, look out below, the market is not expecting it and in fact is expecting the opposite, lower rates. If rates accelerate higher, it will be a raucous year for equities,
Bitcoin
Fib retracement just overhead should represent the extent of this rally before the next leg down. A run much higher than that shaded zone would be intermediate term bullish.
]]>
Below is the IWM 180 minute trend model as it appears poised to drop below the 194.00 Key Level, i.e., the bottom of the Fibonacci Retracement Zone. If that is where IWM closes the session today or tomorrow, that is where new IWM Put positions should be entered.
Note: Without a close below 194, no new trade.
IWM 180 Minute Trend Model
On an IWM close below 194.00, buy the IWM $195P (or any strike to 190). Use 50% trailing stop. The EW target is a drop below 170, making those puts worth 5X their current value. Risk 50%; Reward 5X.
]]>Bitcoin
BITO - Best Bitcoin Option Vehicle
Best Option Play - Intermediate Term
High Risk: High Reward Trade
The $18 strike is highlighted, but $17 is a close second. Note: BITO's low last October was $12.79. Use 50% trailing stop and be ready to take profits quickly if this trade goes in our direction early, i.e., a quick triple in a Bitcoin selling panic. If Bitcoin/BITO takes a dive toward last October's lows any of the listed puts could see a 3X to 5X (or better) pop in short order.
]]>
Premium Service - January 2024 Trades
Both these trades were up enough to allow exiting at about break-even using a 50% trailing stop. If not stopped, all is not lost, but, the market has to turn down soon or it will be.
IWM has been leading the market down since the Dec 27 high and until late this week, our trades were up nicely. Unfortunately, such is not the case this weekend. For those exiting on the trailing stops I will be providing re-entry points this coming week.
IWM Long Term EW Count (Weekly)
Longer term the anticipated Wave 3 deep dive is still in its early stages, last week notwithstanding. The retracement of the first leg down has done what all retracements are designed to do, scare the weak hands out of their positions. It can go on up for a day or two, or even longer, but the resolution to the downside is coming.
IWM Daily
Another touch of the Fib retracement zone is possible, or a reversal straight down back below 192.00 next week. If the latter, we will be aggressively buying puts, stand-by for new trade alerts.
Cycles: 2 Year Cycle Top & 4 Year Cycle Low
This is a 2 and 4 year monthly cycles chart from Elliott Wave International. It has caught the major two year tops with uncanny precision. It projects a top new NOW, while at the same time projecting a 4 year cycle low due around April. The only way that happens is if there is a crash over the next three months (See Feb-Mar 2020). This chart in and of itself argues strongly for betting heavily on the next IWM breakdown.
Note the performance of the S&P Large Cap versus the S&P Average Stock. This dovetails nicely with the IWM Long Term Wave Count and the anticipation for a cycle top due anytime. The euphoria over the performance of a handful of tech darlings is nothing more than a game of three-card monte.
Stand-by for new key levels & new trades coming next week.
Bitcoin (BTC)
Waiting for downside resolution with a break below round number support at 40,000. The BITO options are not very active, meaning not many are betting on any downside beyond what has already taken place.
As a parting observation, note how the Weekly Bitcoin and Weekly IWM charts are sporting the same longer term set-up for a Wave 3 down. Random coincidence, or insightful prescience? We will know soon enough.
]]>"A hard close below last week's low (191.30) makes the case for a precipitous drop toward the late October low (161.67)." Weekend Update 1.13.24
The Feb 16th $190P remains the best positioned option for a deep dive in the Russell 2000 ETF. This may be the last week for these Feb options for the best bang for the buck in terms of time and leverage. If the other indices start to follow there may be more better trade opportunities elsewhere, but for now, any strike between the IWM $190P and $185P looks attractive, especially on an IWM close below 191.30.
DJI
Note that the DOW is still 700 points above its key level breakdown, so its a little early to get too excited or too extended. That could change, quickly,
]]>
A hard close below last week's low (191.30) makes the case for a precipitous drop toward the late October low (161.67). In terms of options and strikes, the $190P will end up being worth close to $30. These puts were trading late Friday around 2.95 (table below). An immediate collapse now in mid-January will open the door for multiple instances of 10X returns as the year unfolds.
Bitcoin (BTC)
Above is a long term weekly chart of bitcoin showing five waves down from the all time high of $69,000 in November, 2021, followed by an ABC Wave 2 (circle) retracement of 61.8% into the end of last week. On Thursday and Friday, BTC fell $6,000, from high tick to Friday close (market close), for about an 8% plunge. On the heels of SEC approval for 11 spot bitcoin ETF,'s this is not bullish. In fact, moves like this have a way of being a harbinger of more of the same over the ensuing weeks and months, which could very well have us trading options on BTC (via BITO) again. Here is shorter term view of late week trading via a 30 minute chart:
And our likely option vehicle:
I am on the lookout for a low-risk entry to the short side as bitcoin, well on its way back to the mid $20K's, over the next few months with BITO down toward its Oct lows into the mid-to-low teens.
TSLA
Breaking below the Fib retracement zone does not bode well for near term prospects. The best case scenario is for a climatic fall similar to the Dec 2022 to Jan 2023 lows which set up the very best Buy Signal of the past few years - note up arrow just past Wave 2 (circe) low of one year ago, launching TSLA from around $127 in $299 in just six months. During thie 2023 run higher TSLA doubled two times, first from Jan-Feb and again from May-July. The key levels for such a low will be between $195-$205, i.e., we need a bottom somewhere before we can start looking for a fresh Buy Signal. The fear and doom surrounding TSLA shares are eerily similar now to a year ago, but there is room for more dread, so stand-by for another break below $200.
GLD
A series of waves 1-2 higher is suggesting the fourth opportunity in Gold & GLD. If the most recent Wave 1 high at at 193.18 gets taken out we will be adding calls as it would suggest a third wave explosion into the low 200's in the weeks and months ahead. It will likely coincide with a swoon in stocks and/or bitcoin, putting all three of these opportunities pretty much in line, ie., market and bitcoin collapse while gold becomes global asset of choice. Geopolitical conditions support this scenario, so we are once again watching the news (uggh), even when the market is closed.
Bottom Line: Four option opportunities ahead; ten baggers all.
Just two weeks into the new year and already four charts are popping out as potential ten-bagger option trades in the weeks ahead. The Thanksgiving-Christmas lull is giving way to volatile if not lucrative new year of opportunity. If the stock market holds up, TSLA is a dirt cheap stock poised to triple, but that is a big IF and I'm not expecting it. Bitcoin and TSLA are both suggesting a worst case scenario, spurred by geopolitical mayhem, lays ahead. In the world of option trading lulls are usually followed by big time trades, just as trader psychology ebbs away from taking risk, the best trade of the year comes knocking. My message to everyone: Be ready.
]]>IWM
A simple self-explanatory chart with key level trigger into the next trade, highlighted below.
]]>IWM
TSLA
TSLA remains on a short-term Sell, awaiting a new Buy for entry into next leg up.
]]>