Crash Window On this last weekend in July, 2024, the stock market is ideally set-up for a crash. It will be almost entirely unexpected and likely triggered by exogenous events on a domestic and/or global scale. This is not a guarantee that a crash will occur, but if I were a betting man (oh wait, I am) I would rate the odds as slightly better than 50-50, i.e., more likely than not. The price patterns, especially on the Nasdaq 100 (QQQ) are exactly what would be expected in the days, or maybe weeks, before such an event. The backdrop from a geopolitical perspective is bad and getting worse. Domestic politics is probably the most unstable it has been in my lifetime. Love him or hate him, Trump was a quarter inch away from being both a martyr and the trigger of a civil war. Imagine the consequences, now imagine that those same forces remain aligned to wreak havoc. It's only a little over three months until November 5th; so our next trades will have to go out to December-January, whatever the cost. Timing is Everything When it comes to options, timing is everything. In May we bought puts on SQ, but it took until the last few trading days in July to see a payoff (chart below) but first, those puts were seriously underwater. It's the toughest part of this game. Sometime between Monday's Open and Thanksgiving, QQQ, which closed Friday at 463 will be well under 400 and it might get there in one fell swoop of a crash. It won't matter much if it stays under 400, or immediately bounces or enters a new bull market soon thereafter. The puts we paid under $500 for will be worth at least $5,000, each. In the unlikely timing that it occurs after September 19, 2024, we will make our gains in December puts, or, if you have been paying attention, the 10X trade will be with January 2025 SH calls (chart below). Best hedge yet, a little of both, some QQQ puts, Sept and then if necessary, Dec, and some SH calls anytime along the way. Stay tuned - an understatement. QQQ 120 Minute I wouldn't call this a crash window without some evidence to back up such a consequential premise. Above, the two-hour QQQ set-up for deep dive in a series of three waves 1-2, leading next to multiple third waves, or call it one big third wave. As stated above, the chances are at least 50-50 we wake up soon to a deep morning global dive. instead of these counter-trends rallies that fizzle out around Fib retracement zones, we will be identifying levels to take our first 10X returns as wave 5(s) come in around 100 QQQ points lower. NDX Daily The same set-up as QQQ, only seen through the eyes of the Nasdaq 100 index on a Daily chart. That big shaded Fib retracement window assumes most of July was Wave 1 down and the index is currently in a multi-day Wave 2 counter-trend rally. It's the most bullish of multiple potential scenarios, but even then, ultimate resolution is at or below the Nov 2023 Wave (4) low. The Wave 3 sell-off should be a doozy. SPY If QQQ is too bi-polar for your trading style, consider SPY and a break below the Key Trend Channel which comes in this weekend at about 540. The low last week was 537.40, but the lower trend channel line is rising daily. SPY closed Friday at about 544. Initial Fib resistance is just above current levels. VIX - Weekly VIX printed as high as 19.36 this past week, right at it's two-year long resistance line in a weekly time frame. A break above 20.00 will be a signal that the crash is happening. Anytime we see a print above 20 will be a time to add to short positions, no matter what. SH Cheap crash insurance: Jan 2025 SH $12C @ 0.30-0.35 QQQ Trade Management Volatility rules. Intraday Friday the "Current Return" on this put was just barely cut in half from "Best Return" levels, but it came back at the end of the session to close above that stop level. My preference is to hold here, but this is an individual choice as I am willing to risk more of my gains because the potential downside reward is so large. A rally early next week would trigger a 50% trailing stop again: By Sep 19th I expect QQQ to be well under 400..but the problem is that it may come all at once. SQ This SQ position was entered May 22nd and at the time Sep seemed like a long time away. What happened? Two weeks ago the puts were seriously underwater, then last week SQ hit a low for the year on Friday as puts rallied from under $3 to above $8. Target remains < $50 on SQ shares, above $15 on the Sep $65P. Bitcoin - Updated Sat AM Knocking on the door of $70K on Saturday morning. BITO Above $25 Targets: $32 - $40 BITO Sep Call Remains a Speculative Buy with a target of $5.00 for a 4X return, and/or $12 for a 10X return Bitcoin - Addendum Why Did Trump Change His Mind on Bitcoin? "Another key emerging figure in the Republican party who is of a similar mind on digital assets as Vivek is Trump’s recent VP pick, J.D. Vance. Senator Vance is vocal about his support for bitcoin and digital assets and has a background in tech venture capital. He is young and he understands the importance of courting younger votes. "So, what will “four more years” of President Trump mean for the US digital asset industry? "Let’s end as we started, with another quote from the President – one that shows, thanks to the efforts of Vivek Ramaswamy, Senator Vance and others, just how much the Republican stance on crypto has changed over the last few years. “I will end Joe Biden’s war on crypto. We will ensure that the future of crypto and the future of Bitcoin will be made in America.” “If Trump is elected, the U.S. will have to add Bitcoin as a reserve, because it is digital gold,” said Arseniy Grusha, chief executive officer of data-center firm Dataprana, who attended the conference. “The earlier they do that, the better it will be for the United States.” Link
