Special Alert: News this morning is of war breaking out in Israel, the ramifications of which on our trading are yet to be seen. By the time markets open Sunday night, there could further developments. The charts and commentary below reflect markets as of Friday's close and before this escalation of hostilities. Remember, when it comes to news affecting the markets, it's not the nature of the news, its how the market reacts that makes all the difference. Expect next week and beyond to drive the financial markets toward that thin line between chaos and capitulation. Big Picture Update A new index chart to sum up the market direction, past, present and future. NYA: NYSE Composite - Weekly Now let's add one simple technical indicator, a year-long trend line that has just been broken to the downside: Add one long-term Elliott Wave count strongly suggesting a third wave down at multiple degrees of trend imminent: Now, the NYA longer-term trend model which generated its most recent Sell Signal the week of Sep 25, 2023: Finally, let's put all-of-the-above together to create a compelling view of the rough few weeks dead ahead: Summary Each of these technical indicators, the single trend line, the EW count and the Long Term Trend Model is a stand-alone directional trading tool which we have been using since the beginning of this service in January, 2010. That they are in alignment in the middle of a seasonal crash cycle is sound an alarm and presenting an opportunity. I was not impressed with Friday's recovery rally, likely an almost finished counter-trend Wave 2 or 4, maybe needing one or two more days to bounce sentiment off of its mid-week lows, before a new and dangerous leg down takes over. Below are our trading charts from which we based our option purchases. I've updated the most likely wave counts on Daily price charts. If I am right, the middle of a third wave down at multiple degrees of trend is next. It will be accompanied by news headlines [late edit: i.e., mid-east war], trading halts and a spike in volatility, all of which is tradable with existing option positions. If the market rallies for another day or so, and then dives, that will be the last chance to add to these positions: Go to November monthly expiration (third week of November) for all new money positions. Trading Positions - Premium Service Trading Positions - PRO Service TRADING CHARTS SPY IWM QQQ TSLA Update Note how different the TSLA chart looks from any of the index charts set out above. TSLA marches to its own cycle, pattern and EW counts. The question mark sets the stage for one of two outcomes, either the powerful bearish patterns set out above overwhelm whatever bullishness is developing in advance of the Oct 18th earnings report, or, TSLA has put in a low from which it will launch run to new highs and above. If the latter, there is plenty of time to accumulate calls in every time frame in preparation of a multi-year advance. Bottom Line Just one week into October, and now this morning (Oct 7) with war breaking out in Israel, the benefit of all doubt must rest with deeper lows and spiking volatility still ahead.
