Chaos ---> Complete disorder and confusion. A good time to review our charts, because they are anything but disorderly and confusing. Keep that in mind if you are reading the financial press, or on social media over the weekend, trying to get a foothold on where the markets may be headed in to the rest of the spring and summer. Also keep in mind our Stock and Gold charts and Blue Line's attendant trading signals, i.e., Short for stocks this year and mostly Long for Gold since October, 2023. If all among you are losing their shit, remember, you are privy to the best EW analysis money can buy, because my own EW, albeit simple and straightforward, is consistent and eminently tradable, as opposed to the more orthodox EW, multi-ruled, guidelines based, nuanced, complicated, for practical purposes, abjectly untradable. Our Trading System In A Nutshell (See GLD chart below) Blue Line Trading System - Our options trading system, based on the principles underlying Elliott Wave Theory, in a nutshell. Pick a time frame, Daily, Weekly Hourly - it really doesn't matter. On a bar, candle or close line price chart, draw parallel trend channels to contain and label legs up or down, seeking a completed even numbered wave. When price breaks out of that channel, assume an odd numbered wave has begun, then pick an expiration month and ATM or OTM strike price that would maximize return for that forecasted leg. Manage the trade with logical money management, i.e., that lets profits run and cuts losses short, being especailly attentive to avoiding risk of ruin. We have a few simple money management rules* that achieves those goals: (1) Cut losses @ 50%, no exceptions; (2) At +50% profit, move that hard stop to break-even; (3) At +100% profit, trigger a trailing stop @ 50% from, best unrealized return and if hit; exit at least half of position, trying to keep something on for expiration, just in case. *These are my rules, experience breeds self-knowledge and improved trading skill, so once comfortable with options and personal risk profiles, feel free to substitute your own percentage levels for these trade management actions to kick in. GLD Buy Signals: 2023-2025 Pattern Recognition - Same As It Always Was Two years of Buy signals on GLD using the simple but effective "Our system in a nutshell" above. These are mostly intermediate timeframe based trades, but same principles apply and are effective on smaller time frames. You can read about each one of the above blue up arrows in our archives, PRO here and Premium here. Use the dates listed on the chart to locate the relevant website post. The same methodology applies to every tradable, whether it be individual stocks or ETF's, whether it be Buys or Sells. Options, ditto - same principles apply: Strikes at or just out of the money, generally 1-2 months to expiration. When a Wave 5 turns out to really be a Wave 3, we rollover at expiration. That is a lesson in and of itself. See TSLA, PLTR, and RKLB, circa 2024. CHARTS - Updated Stock Index: IWM This weekend I want to provide a little different perspective. Instead of the usual suspects, multiple indices charts, lets take an in depth view of one index in particular, IWM, the ETF for the Russell 2000 Index. We have on multiple option expirations with the IWM puts, April 17th, May 16th and Jun 20th, but they all are focused on one chart pattern: Bearish and unfinished to the downside. We will work our way down from longer-term to short-term in an effort to view a more rounded perspective, i.e., multiple degrees of trend...all down. IWM Weekly - "Worst-case Scenario" Right out of the gate this massive multi-year double top should catch everyone's attention, a market crash pending if there ever was one, yet even as dire as this double top pattern appears it would only be matching the 2000-2002 Nasdaq bear market. Not out of the question, nor would it imply anything positive on the horizon, other than one hell of a buying opportunity somewhere down the road. IWM 2-Day: Elliott Wave - Intermediate Term The next most likely Big Picture unfolding is this two-day EW pattern, suggesting a few more days, maybe a week, of a continuing fourth wave before wave V (circle) of 3 kicks off in earnest. IWM Daily This is the cleanest look I can generate for EW. As is suggested, more downside to come on the other side of the current corrective sideways-to-up pattern, whether it is a second or fourth wave. IWM 240 Minute These two intraday charts, above the 240 minute, below the 120 minute, are what I have on my screen all day long. When these gap-open, one way or the other, they get my attention. If up, I am on alert for a reversal back down during the trading session. If down, I'm on alert at key levels, i.e., prior lows, that if taken out will lead to acceleration down. IWM 120 Minute A convincing move down, to below the most recent price bar lows 171.73 on Monday and 171.74 on Wednesday, will kick off a third wave down at multiple degrees of trend. By the time it takes out those lows, which are 7% below Friday's close, there will be panic in the air. We would want to be all in on the short side by then. Taking out last week's highs would open the door for an entirely different paradigm. Unexpected, but if it occurs, we can go a different way. GLD - Another Exponential Win GLD is a perfect example of why keeping some option contracts open into expiration week, no matter what, is part of our money management routine. Even in cases where there are outstanding Buys and Sells, calls and puts, on a stock or ETF, it is just an unintended "straddle" where one side is expected to more than make what the other side has lost. Per our money management rules, maximum losses are -50%, while there is no maximum gain for getting it right. Gold Daily With four trading sessions to go until Apr 17th expiration, we have a 400% winner on this trade from back in early February, over 500% from when it was first highlighted on Jan 30th. If still holding this long, it may as well be held until the bitter end, unless the Trailing 50% Stop triggers and the position is forced out with triple @ +201%. Come next Wednesday we will decide whether or not rolling over into a new strike and month makes sense. We will likely go down to the wire on this one. Option Tables PRO Trades Premium Trades
