Since the major indices are diverging in their very short-term patterns, let's continue with SPX as the for the next spate of trade triggers, due over the next 10 trading days, Once this next leg down is underway it won't matter which index puts are being held, only that they are held and held tightly. Time permitting, I can set out a price trigger chart for all of the various ETF puts, but, time is unlikely to be cooperative. When Wave 3 begins, time will be of the essence as I still expect the coming nightmare to arise overnight from across the pond and we awake one day to "limit-down" in our bond and equity markets. A dollar crash would do it. SPX 240 Minute (1) The first trigger is not a trigger at all, it is to be all-in on the short side now and not wait for price breaks to add positions; (2) SPX 3800 - A breakdown below SPX 3800 confirms the end of the counter-trend rally up from the Oct 13th Wave 1 Low. Until 3800 is broken the assumption is that Wave 2 up is still underway and could go modestly higher-longer; (3) SPX 3650 - Breaking below 3650 should work as an accelerant. That is the Wave (b) low of Wave 2's (a)-(b)-(c) pattern and once broken, there is literalluy no chance that Wave 2 is still in play. The Wave 1 Low is at 3491 and it too could act as an acceleration down once broken. However, once 3650-3600 is taken out, 3491 is a goner so I see no reason to wait that additional 100-150 SPX points. If my "limit-down" thesis is correct, all of those levels could get taken out in one fell swoop. In other words, the next hard gap down opening will be the start of a multi-week, multi-month stock market meltdown and the next big leg up in our option portfolios.
