Seasonally it is more likely that a market crash will occur in the next six weeks than any other six week period in the year. If it were to occur the early price patterns that would precede it are exactly what we are seeing now. These patterns will amount to a perfect storm of broken support levels and a cascading series of lower lows and lower highs (see FB, EEM and IWM hourly charts below). If it unfolds as price patterns and seasonality suggest it will, then those elusive 10X option returns (read: VXX) are on the way between now and mid-November. Our trading will have take a stand, right or wrong, because we are here to make money, not just pontificate on "what-if." Below are the charts we are following with the patterns in early development. In addition to the current positions, we will likely be adding some November 19th expirations which would carry all the way through to the end of the "crash window." SPX The S&P 500 closed below the all important trend line coming up from the late 2020 lows. A close below 4435 was considered a "hard close" to go along with the system sell signal. What more do we need? VXX The Daily VXX chart still hasn't triggered a formal "Buy Signal," BUT, both the VIX, on which VXX is based, and the VXX 240 minute trend model have triggered Long. The evidence is compelling so at least initial VXX long positions can be added at this time. Note on the 5 minute chart how VXX was on the verge of breaking out going into Friday's close. Oct 15th $25C (currently 3.35-3.50) Oct 15th $27C (currently 2.80-3.00) Oct 15th $30C (currently 2.20-2.30) VXX - 5 Minute - Friday's Trading If on Monday VXX gaps higher on the Open, additional strikes can and should be considered. QQQ DJIA DIA ROKU AAPL EEM - Hourly FB - Hourly IWM - Hourly These charts a just a sampling of bearish price patterns I am seeing across dozens of high profile stocks and indexes. From my days before the bench, the preponderance of evidence says hard down. Is it beyond a reasonable doubt? It doesn't have to be. Allan
