These charts and commentary went out to our Blue Line Subscribers after the Dow opened up 300 points this morning. If you are active, or even a casual option trader, or even if you don't trade options at all, would it have been useful going into the long holiday weekend?
Blue Line PRO Update: Friday AM: QQQ & IWM
QQQ opened last Friday @ $320.28 and fell to its weekly low yesterday, Thursday, @ 292.95, a decline of over 27 QQQ pts in five days. Today's bounce notwithstanding, the EW pattern is projecting a move to below $250 by Sep 16th expiration at the earliest, and October 21st expiration at the latest. The Sep 16th $315P is well in-the-money and can be held here, or, rolled up into the Oct 21st expiration with strikes between $290-$270 depending on your tolerance for risk. There are seven weeks to go until Oct 21st expiration. At its Wave 2 pivot high on August 15th, QQQ was trading at $334.42, almost 40 points above yesterday's interim low, a decline of 40 pts in less than two weeks, with the steepest drop still ahead.
Blue Line Premium Update: Into The Close
[Posted an hour before the close.]
The final three-day weekend of the summer is upon us and the market, as set out in the charts below, is looking bearish and on the precipice of a deep dive into the Sep-Oct crash window. Friday has turned lower, overcoming an early 300 pt Dow rally and the market is now trading toward the lows of the day. As the three charts below suggest, the path of least resistance since the mid Aug Wave 2 Top has been down and the strongest part of the bear market, Wave 3 - dead ahead.