The Calendar Ahead Heads-up: The next CPI Release is Dec 13th (pre-market), followed the next day by an FOMC policy meeting announcement (and Press Conference) on Dec 14th (2:00 pm ET), with Dec 16th monthly options expiration just two days later. A week past options expiration is Christmas, then one week more to New Years, followed by the first three new weeks of the new year, culminating right into January 20th monthly options expiration. Trade Management Ahead As for the market, slightly less certainty, but between now and that first monthly options expiration of the new year all hell should by breaking loose. Accordingly, focus should now be the Jan 20th expiration series, even if that means going out further in strikes to compensate for the increased costs due to the added time value. As of today, there are 14 days until Dec 16th expiration and 49 days left until Jan 20th expiration. Those extra 35 days should be well worth the additional premium cost. Big Picture - Reversal, Then Acceleration Down The big picture is still that of a bear market that started 12-14 months ago depending on any one particular market index. The most virulent leg of market decline lays ahead in the pattern of a series of Wave 3's at multiple degrees of trend across all major market stock indices. We continue to identify key price levels which when broken will lead to dramatic acceleration down in the stock market accompanied by a long awaited spike higher in volatility. Key Levels Key levels are determined by principles of pattern recognition, essentially requiring price to confirm an assumed pattern under development before committing to a trade. Currently, a market decline steep enough to erase last week's run-up brings front and center the prospect of Wave 3's down at multiple degrees of trend, a steep and unrelenting move lower across all market indices. In such a development, all key levels identified below should get taken out, whether it be over a few days, or in one fell swoop of a gap down. We will be monitoring these levels until they are either broken, or otherwise no longer relevant. DJIA: Key Level = Close below 33,500 SPX: Key Level = Close below 3950 QQQ: Key Level - Close below 280 IWM: Key Level = Close below 180 IYR: Key Level = Close below 85 If it looks as though any one or more of the above Key Levels will be broken any day next week, make sure to check the website (Premium; Pro) for Trade Alerts with new option recommendations. Guest Chart Courtesy Elliott Wave International
