Yesterday I wrote: Bearish Scenario (1) Huge gap-up from Monday gets filled, then, (2) Last Friday's lows get taken out, then, (3) Wave 3 "free-fall" begins. One step at a time. I suspect steps (1) and (2) will occur on the same day, maybe even today, and step (3) will follow one or two days later but with such a gap-down that it is too late to get short. Therefore, the time to be positioned for step (3) will be on or before the occurrence of step (2). As Wave 3 begins the stock market is headed into the President's Day three-day weekend. While the U.S. market is closed, global markets will be open, leaving a huge question market for how our market will open next Tuesday morning. Based upon the charts below, updated through the first 90 minutes of trading today, the much anticipated Wave 3 down has begun, suggesting that all surprises will be to downside. Trading Positions: Feb 18th ---> Mar 18th Feb 18 expiration series goes off the board tomorrow, so all open Feb positions will have to be rolled into March before Friday's close. Index puts should be rolled into March 18 expiration, while any UVXY/VXX calls can be rolled into Feb 25, Mar 4, or Mar 18. DJI - Big Picture QQQ - Breaking Down QQQ is trading at about 350 this morning, targeting a breakdown of first 345 and then 335. Below the latter next support isn't until 300. Accordingly I am in no hurry to take profits before the weekend, and in fact may look for an aggressive add-on below 335. Sharp counter-trend rallies are part and parcel of impulsive waves down, but so long as the lower-lows and lower-highs pattern ( 1-2; 1-2) remains intact the trend is lower into March.
