The Stock Market As is set out in the the below selection of market indices, the Intermediate and Short-Term trends are down and in an Elliott Wave pattern that allows for a progression into hard down. We want to be fully leveraged to the downside should that progression unfold this next week. Accordingly key support low prints from last week are labeled on these charts and as these levels are taken out, whether next week or the week after, the confidence level of a hard down phase will approach 100%. DJIA Intermediate Term Shorter-Term Other Market Indices SPX SPX: Stay with me here: The shaded rectangles are both 0.618 retracements of the previous leg down, with both counter-trend rallies hitting that Fib resistance and reversing back into the dominant downtrend. If there is ever going to be one of those "limit down" days in the market's immediate future, the set-up going into it will look just like this SPX chart. That doesn't mean it has to happen next week, it does mean that if it happens it will start with those low prints from last week being taken out first. If and when it happens, check the website for interim updates. QQQ - Short-Term IWM Intermediate Term VXX Maybe the biggest tell of all will be VXX on Monday-Tuesday. If it can break back above its broken trend line, especially on a gap, it will add greatly to the weight of the evidence for a HARD DOWN in the equity markets. The pattern of higher highs and higher lows is in tact, and only that broken trendline from Friday the so called "fly in the ointment" for the immediate bearish case for stock indexes, and bullish case for VXX/UVXY. Trade Management & Trading Halts There are only five trading days left until Mar 18th expiration so we will be out of Mar 18th positions and into the April 14th expiration series by the end of the week. Any new positions should go right into Apr 14th expiration, while rolling over expiring options into Apr expiration is more of a case-by-case analysis. Be aware that a 7% drop in the Dow or S&P triggers a 15 minute trading halt, with other levels triggering further halts thereafter. Key takeaway: Don't be in the middle of rolling over index options near a trading halt or you may find yourself without any position on in front of a series of limit down days.
