The subject last weekend was, "Interesting Times Ahead" and Friday's 600 point DOW rally into the close did much to prove my point. It was hard down all week, pretty much right into mid-session on Friday, then a rip-roaring old fashion counter-trend spike to send everyone home Friday with buying the dip mentalities. Do yourselves a favor this weekend and check out social media, in particular X (Formerly Twitter) and YouTube, and note foaming at the mouth rabid bulls stating the bottom is in. It's called all of or a large part of a "Wave C of 2" and I've positioned ideal stopping points with my usual shaded Fibonacci rectangles in the market index charts below. Next week prices will likely reach and reverse inside said Fib zones, and what comes next should be a dynamic, deep decline to new lows, in step with the larger intermediate term decline which is not close to being over. If that prognosis is wrong, we will know it soon enough as prices continue rising above those rectangles. Upon reversals back down we will be all in on the short side. DJIA 120 Minute Friday's strong reversal could be all of or most of the corrective action before Wave 3 down continues to the Targets shown on the Double Top. A day or two of further rally would only serve to make the subsequent reversal back down all that more severe. If so, we will be adding to shorts mid-week. This is a pattern that repeats in all of the market index charts that follow. SPY 120 Minute Almost identical to the DJI, lending credibility to the Wave Count, Fib retracement rectangle and Fib targets to new lows. QQQ A little different than the DJI and SPY, this QQQ retracement did not quite reach into the shaded Fib zone which comes in at about 513 (0.382). Nonetheless, QQQ is offering the greatest leverage to the downside via SQQQ calls, so it remains one of my prime trading vehicles. In a strong enough downtrend the first retracement can be shallow, as per the hourly chart below: QQQ Hourly QQQ's retracement is much closer to being over in this scenario. Friday's low was 496.93, so its safe to assume any decline taking out 500 in a meaningful way would be a time to start loading up on SQQQ calls. IWM 240 Minute Again, a similar pattern unfolding in IWM, allowing for a shallower retracement but still one or two more days of what we saw late Friday. Bottom line, the big picture for the next few months is down, however the next few days turn out. Trade Management These are two short positions we put on about a week ago, closing Friday right around their respective 50% trailing stops: In Friday's Into The Close I suggested holding at least some of the above options without a tight stop, a "just in case" contingency trade. Any further upside next week compels taking some of these gains, but also leaving some on, just in case. No matter how far up the market has yet to go, dropping below Friday's lows would be a warning of much lower prices ahead. We will deal with that contingency on a day-to-day, as needed, basis. Gold Nothing to do here. Bitcoin Consistent with the downside risk in stocks and QQQ in particular, BTC is setting up for a third wave down. We are short already in the PRO Service and upon confirmation of a third wave decline we will be joining that short in the Premium Service. In no universe do I see us going long anytime soon. TSLA Let's end this weekend's update with the only bullish pattern on my radar: TSLA bouncing up off of its 0.786 Fibonacci retracement level of the Wave (iii) rally from $212 last October to 488.54 in December. It's labeled a completed Wave (iv) in this chart, with a wave (v) of 3 to $600 due next. Not exactly a high confidence trade considering the precarious picture painted in all of the above stock index charts. It would take a breakout above $320 to turn the picture bullish, with $340 even better. With that high a target, buying TSLA above $350 for a run to $600 by year end would be something to get excited about. Keep that in the back of your minds, just in case. Active Options Premium Service PRO Service
