I have been warning about a fall sell-off since mid-summer. It's finally here and not nearly over. The initial thrust down is unfolding as a third wave at multiple degrees of trend, which means multiple impulse waves down, followed by counter-trend rallies as preludes to even stronger thrusts down. DJI Intermediate Term Trend Note how the August 17 Sell Signal was good for an initial thrust down to the first Fibonacci extension target (right axis - 33304) and has found temporary support. It will soon give way as the DJI tumbles toward the lower Fib levels. Next stop, 32265, to be followed by 30583. SPY Intermediate Term Trading Model The SPY Sep 12th Sell Signal at 446 was good for 20 point decline in two weeks to the bottom channel support trend line, which also corresponded to a SPY Fibonacci extension level of 427. Just like the Dow, that level held the decline..temporarily, pending a resumption of the sell-off to the next levels of support at 410, 400 and then 384. Absent a major rally to invalidate the, "third wave at multiple degrees of trend," scenario, hold puts and add as key levels of support get taken out. Trade Management For anyone taking profits along the way and looking to re-establish new put positions, as of next Monday new option positions will be going out to monthly November expiration, i.e., Nov 17th (except for VIX monthly calls which expire on Nov 15th). If this third wave at multiple degrees of trend is all that it should be, there some huge, exponential gains to be had. When the lows are finally in, we will be turning our attention to a robust market recovery, led by TSLA. Nov 17th SPY Puts SPY should be well under 400 by or before Nov monthly expiration
