It's been quite awhile since the stock market has been near a key infliction point, one which we could consider entering a new directional trade. However the action of IWM over the past month has presented such an opportunity where the two key levels we have been monitoring for over a month are both coming into play. This Weekend Update is focused almost entirely on this opportunity, with only modest additional weakness needed next week to trigger a new trade in Jul 19th and/or Sep 20th IWM puts. Read on. This is not a pretty picture for bulls, or even bears holding out for a summer rally before an election season Armageddon. Instead, patterns suggest a huge red flag that a summer decline has already begun in IWM and is about to spread to other major stock market indices. This one major stock average has been stealth-like lower for the past four weeks and closed Friday quietly sitting at its lowest level in over a month and right on Key Level support. Any further weakness next week triggers the following trade: --------- ON AN IWM BREAK BELOW 200.00 START ACCUMULATING JUL 19th AND/OR SEP 20th PUTS FROM THE TABLES BELOW, ADDING ON A CLOSE BELOW 200 AND AGAIN ON ANY CLOSE BELOW 195. THE TRADING PLAN TO BE AGGRESSIVELY PROACTIVE ON ANY ACCELERATION DOWN. ------ July Monthly Expiration September Monthly Expiration Highlighted rows are preferred strikes, but any listed option in these tables has excellent risk:reward profiles. ---- BITCOIN ---- The failure of Bitcoin to exceed $72,000, let alone close above it, is tempering any residual bullishness, especailly for a big move upwards any time soon. Let's give it one more week, but it will still take a run above $72,000 to add any BITO calls. ---- GLD ---- Friday's hard down red bar = follow-through lower next week, or alternatively could be a terminal C Wave before next leg up. We will let price be our guide next week. ---- Bonds & Interest Rates ---- This is another turning possible turning point that also has implications for a summer of volatility. Longer term charts show the 10 Year Bond ETF, TLT, nearing completion of five waves down, while 10 year US Bond Interest Rates are tracing out five major waves up. The Fed is expected to step in and provide liquidity, i.e., lower rates, easy money, upon any developing crisis in the financial markets. These longer term patterns are consistent with such a scenario. That doesn't mean it will happen, but it is worth keeping an eye on leading up into November 5th. TLT 10 Year Interest Rates ------ 10 Year Yield YTD ------ Friday saw a huge bounce higher off of lower channel line, follow-through next week will not be good for stocks.
