Summary Today's rally has the feel of a counter-trend pop in all but the shortest of time frames. It can become more bullish if it can follow-through higher enough, or put in multiple up days, but as the charts below suggest, something longer-term and bearish is the most likely intermediate term resolution (See SPX chart below). Trading Strategy: Staggered Entries A dip that could be bought in front of an end-of-year rally is morphing into something with longer-term bearish implications. We will lean toward Dec/Jan expirations for any new option positions (outlined below) adding on any breakdowns while keeping our focus on either QQQ puts or the inverse-leveraged SQQQ calls as our chief strategic vehicles for the immediate future. Note on the Daily charts for DJI, SPX and QQQ that the market is in the process of rolling over, from multiple chart perspectives, but not quite there yet. QQQ Daily Trend-line support followed by Fib retracement, then taking out today's low (617) would strongly suggest adding to any Dec/Jan bearish option positions. DJI The pattern is familiar across all indices, i.e., a bit more upside then reversal back down, taking out the most recent red bar's low print before or in the course of a hard down day. SPX - Throw-over and Reversal Pending This is a longer-term chart of SPX with a 5-year up-channel containing the entire run-up from the Covid lows showing multiple trend line hits, culminating with a throw-over top over the past week. Once SPX settles back into the multi-year channel, expect to decline to test lower channel support, coming in this month at about SPX 5,500, about 15% lower. That would take QQQ to the low 500's and value the QQQ 550P upwards to $50 (Currently around $5.00). SPX: Close-up snapshot at top of 5-year channel. Preferred Options QQQ Jan Puts SQQQ Dec Calls SQQQ Jan Calls
