Totally Speculative Thought on $ES; Just Some Brainstorming

So, lots of things aren’t exactly screaming risk off just yet (see the list here), and I can add a few more thoughts here:

  1. Based off what I could see on Twitter, I feel like a lot of folks covered shorts at the close today (not being critical about that, it would be stupid not to in this market)
  2. But I also see a lot of puts in the system
  3. I also saw a lot of bulls buying the close, looking for at least a bounce
  4. Damn near everybody has a 2 right where I have my big blue 2 (e.g., here)

Putting all of these together, I was trying to come up with a chart path that would surprise the most number of people, and this is what I’ve come up with. It’s just an imaginary scenario at this point, but keep it in mind, because I think it’s interesting.

What if, instead of my blue 2 being so simple (3-waves, simple and done), it turns out to be far more complex? What if we’re still in it? If we are, here’s what it could look like. We could have done 3 waves up for orange a (of blue 2), we could be in the orange b now (which could end anywhere in the ellipse), with the orange c to come. On this setup, anyone who covered today might fomo back in short tomorrow, only to get blasted, anyone who bought the dip today would get blasted in the morning, all the bulls who are sitting on a mountain of 480-anything $SPY calls will get wrecked because we won’t get there by OPEX and the majority of the mountain of puts in the system would get blasted too if we rally next week from one more low.

It’s just a thought. It’s dirty and mean-spirited. It would explain why some of the risk signals are not screaming loudly just yet. It’s also a count no one else is considering at the moment (so far as I can see). So, in trying to look for something unique and strange (and totally speculative), it’s what I thought of.


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2 thoughts on “Totally Speculative Thought on $ES; Just Some Brainstorming”

  1. *Trader beware* of the catalyst that gets slowly digested, its not a “shock” impact to the market.

    At this point your Grandmother has heard CNBC pitch the narrative that inflation will harm equities.

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