The Ugly This chart epitomizes the first six weeks of trading in 2024 and is providing the basis for our next high risk high reward option play. SMCI SMCI opened last week at $760, ran as high as $1077.87 on Friday, then fell to close at $803.32. That round trip excursion ended Friday down 25% from its high print. For a service that prides itself on pattern recognition, this price action of one of the the AI darlings is similarly set-up as typical of other stock market manias, all of which ended badly and there is absolutely no reason to believe this one will end any differently. If our timing is correct, mega option returns are probable. Guest "Ugly" Chart: From Robert Prechter, Elliott Wave International Accordingly, as we go into the end of February and into March, my goal will be to identify "crash" worthy bets not unlike what SMCI showed with its turn-around on Friday. On first scan over this weekend, there are plenty of candidates and almost all of which are part of one index: QQQ. The Bad QQQ Daily Trend Model Above is the QQQ Daily Trend Model, it's reversal signal price level sitting at 425.34 this weekend. It will take at least one close below that price level to trigger a QQQ Sell Pending set-up, with an actual confirmation coming with multiple closes below that level. Alternatively, we can swing for the fences and start buying QQQ puts on Tuesday. That would be my preference, a gradual dollar cost averaging into April 19th QQQ puts because it just looks ripe for a crash. Reason enough? I think so. You don't have to bet the farm, not yet at least. QQQ 180 Minute Trend Model This is a more aggressive approach, using a shorter time frame for our trigger trend model. In this case, the 3 hour price bar intraday model that is often early, right or wrong, but this weekend it is sporting a fresh Sell Signal red arrow generated on the close Friday. Reason enough? I think so. QQQ Hourly Last but not least, above is our shortest-term QQQ chart, hourly, with Fib projections that come into play once QQQ closes below 425.34. As you can see, the immediate drop expected in the ensuing 30 days is to well below $400, setting up anywhere from 5X to 10X on April expiration strikes. On Tuesday these April 19th $400 puts will have 60 days to play out. If QQQ drops to $370 they will be worth at least $30, for an approximate 10X return. Remember, all this is predicated on a stock market mania coming to a crashing end. Reason enough to roll the dice? Putting all the pieces together, I think so. March 15th Expiration - If Tuesday is hard down out of the gate - Aggressive Traders Only The Good TSLA If next week is higher rather than lower we will likely get a fresh Buy Signal in our TSLA Daily Trend Model. Since we trade this model regardless of our market opinion, such a signal will mean a new set of TSLA calls. Note that price is already trading above the signal line, but no signal has been forthcoming, That will not last much longer, any new strength in TSLA shares will eventually generate a new Buy, it's what the model is built to do. (Note: Wave (3) projection is close to double current share price.) Based on what the rest of the Nasdaq has been doing, staying flat TSLA has been fine with me. There is a run to all time highs ahead, but a market crash may be on deck first. We should know by this time next week. Red Down Arrows Pending Something wicked this way comes: Note: NVDA earnings due out Wednesday, this WILL move markets. Note: Preliminary Sell on at Friday's close.
