For a week we have pointed out how SPX 3800 was KEY SUPPORT the failure of which will usher in the next and most devastating down-leg yet of the nascent bear market, the Wave 3 of 3 that will result in circuit breakers. Insofar as 3800 has held firm, there has been nothing to do but wait. Approaching a three-day holiday weekend with much trepidation and as alluded to yesterday, keeping an eye on Bitcoin for any sudden spikes higher or lower that will set the tone for a summer rally/crash cycle to ignite. The IWM chart below sports a rising a-b-c- counter-trend channel working off all of the negative sentiment built up over the past few weeks. We all know what happens when the bough breaks... The breaking down through SPX 3800 as well as the breaking down of this IWM channel will likely coincide with a gap-down market event. The only way to have short positions in place prior to this happening is to suffer through drawdowns in advance, i.e., like today. The alternative is to stand aside and wait for the breaking down to occur. but then you are chasing a diving market in fast market conditions. TSLA If there is a silver lining in all of this it is contained in this 2-Day log chart of TSLA, showing long-term trend support holding right at 620-640 and ripe for a double to the top of the channel around 4th quarter 2022. In the best of both worlds, we get the market debacle this summer and still see new highs in TSLA by year end. That scenario assumes one more washout low for TSLA in the $500's coinciding with that market event, then onward and upwards with 18 months of soaring TSLA call prices as the share price reaches into the $2K's.
