Out On A Limb Literally. That's where the market indices appear to have ended on Friday, which suggests a hard down resolution. A little higher early next week would likely change the picture, but just in case the market heads down early next week, we need price triggers for new positioning. The next section deals with those triggers and below that are some new options to consider IF AND ONLY IF those price levels are violated. Elliott Wave Warning Pattern A review of last week's price action going into the final numbers for Friday reveals an EW signature pattern common at the end of major price cycles. In EW parlance its called an, "Ending Diagonal" and clicking on that link (optional) will explain it in more detail. The take-away for our trading purposes is that next week we should be looking for bearish triggers that could send this market down and potentially hard down. If this set-up is wrong, the market will prove it's mettle by a continuing to rally. We can be a few days late in joining that party and still expect to clean up big time on any aggressively bullish positions into taken into the end of the year. *Next week market movers = Fed Meeting + Earnings: AAPL, AMZN, GOOGL, META, MSFT Action Triggers Any price decline of substance in major averages needs to be met by immediate action. I'm defining a decline of substance as any price decline that takes out Friday's low prints as marked on the charts below. Charts Classic trading opportunity: Five waves up into an ending diagonal with a terminal gap-up day, then followed by decline below the beginning of that gap. DO NOT IGNORE...It's called "Pattern Recognition" for a reason. DJIA SPX QQQ Option Strategies for Market Decline SPY Nov 21st/Dec 19th OTM Puts ($560-$550) - Aggressive QID Dec 19th OTM Calls ($20-$22) - More Aggressive UVXY Nov 21st ATM to OTM Calls ($10-12) - Most Aggressive I'll post my specific positioning if and when the price appears to be confirming the reversal down across major stock indices and Monday-Wednesday looks to be the prime window for such a reversal. If instead, the market ploughs higher next week, a more bullish positioning will be forthcoming. Active Options PRO Service Premium Service After a rock and roll summer and fall in our options' picks, things quieted down post October monthly expiration. Don't let the lack of new highs on our Active Trades, or a week without any new trades lull you into a false sense of satisfaction. Yes, even with our 50% trailing stops taking us out we had some massive winning trades! That was then, this is now and into Dec expiration, with the next round of trades, bullish, bearish or any combination thereof, knocking...Let's be prepared.
