The expected third leg down, which I’ve mentioned would happen many times over the past few weeks, is happening before our very eyes, and it’s not hanging about!
Remember what I said just last week!
In line with my reading of the markets over the past few months, I’m hoping this current stalling will be followed by short-term choppiness and then a decline that will complete a Shrinking Retracements third leg down in the next couple of months.
The fear now is that this could turn out not to be an orderly retreat but an outright panic as the market adjusts to the prospect of sustained and even rising interest rates for the next 12-months and beyond.
But for now, it’s quite uncanny how the main indices are playing out. Indeed, during my Options Bootcamp Mastermind on Thursday, we focused on bearish setups to play with the OptionEasy Analyzer.
The bearish setup I fancied most was on the IWM. Having agreed that the recent highs looked unassailable in the short term, we used the Analyzer to compare different bear call spreads. And what we found were fantastic opportunities … all in just a couple of intuitive clicks.
Those bear calls that we compared have all more than doubled in terms of profit purely from Friday’s action alone! In other words, we sold the spread for X, and we could now buy them back for less than half.
Market Outlook:
Well, certainly not bullish!
As I said last week:
Increasing volatility is highly likely over the next few weeks. In due course, this will lead to very tradeable setups.
Well, increasing volatility happened immediately!
The Main Indices:
The markets didn’t get near my maximum targets, and now it’s a question of what’s the downside target?
From last week:
The indices are stalling at or around their 200-dma’s … some short term volatility would be super helpful in terms of telegraphing the next down move as part of our broader based basing action.
The 200-dma did indeed provide serious resistance, and the fallout has been severe. Next stop is the 50-dma, which is pretty close by, and the likelihood is that we’ll breach that too.
Market Timers:
- Longer Term Market Timer (OVIsi): Still amber (as predicted)
- Medium Term Swing Timer: Negative (almost oversold as of Friday)
- SPY OVI: Negative
Fast Filters Stock Selection:
I’ve gone through most of my Fast Filters this week and here’s a smaller segment that you can focus on.
ARKK BMBL CG CVX DDD FORG GLPG HOG IWM KAR KMX META MSI NCR NU PATH PHR SLCA SPLK STZ TDOC TTD UPWK VCYT VIR VMC ZIP
Software Upgrades:
You’ll see data improvements this coming week. Later in the fall you’ll be able to get your newsfeed and messaging within the platform area.
The OptionEasy Analyzer upgrade was released last week – we had fun with it – and there will be a quick minor fix to the “probability of profit” which isn’t showing for some strategies … I don’t use that metric in any case!
Events:
The Stocks Summit is on 3rd December at the London Courtyard Marriott Heathrow.
Register to get in on the early bird savings
I’m sending personal invites to previous Miami attendees to take advantage of the discount hotel rates.
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Remember, you can play the video at 1.25x or 1.5x speed if you want to save time! I have placed all the stocks covered in today’s review in your “Latest Preview” watch list.
