Last Saturday I suggested that the end of the month would coincide with the opening of a stock market crash window. For the rest of last week I added to that narrative almost daily, with a series of charts and Key Levels that if broken would add credence to that very same crash scenario, ending up with an unusually worrisome update on Friday as the upward channels on all major indices finally gave way as the week ended in a solid downtrends across the board that looks more like a beginning of something big more than anything close to an end. Let's take a look, one by one, with some sick stocks thrown in for good measure. DJI Starting off with the Dow Jones Industrial Average and in particular, how the lower trend channel up from late 2023 held prices in check over the final two hours of Friday's session. It was the only index to do so, as is shown in the charts that follow. SPY SPY ended its bull run on with five clean waves up into mid-July, then a waterfall decline breaking its upward channel with a vengeance. QQQ QQQ 2 hour chart broke down with same bearish authority as SPY above, now targeting 400 in the days-to-weeks ahead. From a high on Jul 10 to a low on Aug 2, QQQ fell 60 points, closing the week at 448 and taking our once way out of the money puts all the way to in the money. I'm looking for the 300's before Labor day and well before Sep monthly option expiration. Trade Management So long as this decline in the stock market is closer to the beginning than the end, this position has much, much more to run. Counter-trend rallies have been opportunities to add. Now that this strike is in the money, consider rolling over to a more leveraged put. Rollover Candidate This was as high as 5.63 at the market lows on Friday. It too is headed toward in the money status. VIX Weekly In just two weeks VIX soared from 10 and change to over 30, closing the week at 23.38. Its Covid Crash spike reached 85, a worthy target if a global worst-case scenario gets out of control (starting with Japan - Sunday night). Some Sick Stocks MSFT On Friday MSFT, a major component of DJIA, S&P 500 and Nasdaq 100 (QQQ), closed solidly below its uptrend channel going back to January 2023, closing at $408.49. It would take a close above $420.00 for it to retake that channel. Call that a bull/bear line in the sand. MSFT has fallen from $468 to a low on Friday of $404.34, a decline of 14% over the past month. "Sick" is an understatement. AMZN AMZN is another prominent member of the DJIA, S&P 500 and Nasdaq 100. As with MSFT, it started to plummet in July, from a high of $201 to a close Friday at $168, a 20% decline interrupted only by a fleeting 50% Fibonacci retracement mid-week. NVDA This domino has yet to breach its uptrend channel...at least on a closing basis. NVDA's lower channel held, just barely, on Friday, but the pattern is identical in every other way to MSFT and AMZN above. Look for a breakdown below 100 (Friday's low was 101.37) to signal a Wave 3 decline is underway. Gold Gold Futures GLD We have been holding Sep GLD calls since June 18th, currently up 91%, but the position has been as high as +172% as recently as July 17th. Depending on geopolitical and monetary pressures, this position has the potential to reach new higher highs or be reduced to zero. It literally is a "tough call." For now, the chart above sets out the bullish case, a run to $245 and then $263. If so, the Sep 20th $220C will be worth from $25 to $43, up 5X to 8X from entry. With that kind of reward, its worth hanging onto the calls to see what happens. Nonetheless, take profits if the gain drops to +50% or lower.
