Today's gap-down Open looked promising for a kick-off to our expected fresh leg down, the, "Wave 3 of 3." The failure to follow-through, at least so far today, places that narrative back in "pending" mode. I've tried to simplify the visuals in the S&P chart below. Note how as of this posting, price has slid back up above the lower trend line rising up from the 3636 wave (i) low on Jun 17th : For the rest of this week, below the trend line is bearish and an assumed Wave 3 down, above the trendline still bearish, but not confirmed new leg down and puts July 15th option expiration in jeopardy of not containing the bulk of the move. In that case, we look to August monthly expiration, Aug 19th and/or dollar cost averaging into the IYR Sep 16th $100P (or $95 or $90 alternative strikes). We do not want to miss the steepest, most volatile part of the impulsive wave lower in the stock market this summer. It's ok to be under-invested or under-leveraged in it, but it is not ok to miss it. That's what I mean by preferring extra time over money in my option expirations and strikes. As unlikely as it is, the market can hold up, or at least sideways, until Labor Day and then it all come crashing down over another three-day holiday weekend. That why I am watching the charts so doggedly. They will tell us not only when it is happening, but just as importantly, when it is not happening. While price is above that lower rising trend line, it is not happening. When it drops back below...Wave 3 is back on.
