I hate being like this, guys. I have been consistent in my views. I have examined a lot of evidence from a wide variety of angles. I have also been patient. However, we haven’t had a powerful rally yet. Today would have been a great day for one because there’s an enormous number of puts expiring today, and that can give the market a lot of lift. It hasn’t, which means that that put delta is being replaced as fast as it’s decaying.
At any rate, this is not my primary expectation, but a cautionary possibility. I would prefer to see a powerful rally emerge at any moment. But I can only say for so long. Maybe it will come right after I post this.
But, the same structure we may be able to see on Apple (here) is visible on the S&P 500, too. Whereas Apple has not fallen from its channel, the S&P is below its COVID trend line, consolidating under it. If that is some kind of triangle “B-Wave,” perhaps it is done like this:
It would imply another move lower. I have noted a target where the legs are equal in length (it may go lower, but it doesn’t have to).
I would prefer to think this consolidation is a Wyckoff accumulation. And if we get a strong rally, that is how I will understand it and that is how I am primarily positioned. But, if the market needs some ungodly flush before it can become very bullish again, this is something it may need to do, and I hedged for this possibility.
With Apple poised right at its channel, I can’t really know which way we’re going to go. Sentiment says we need to go up and up and up a lot and for a long time to burn that bearishness off. But if the Apple channel fails, how can I ignore that?
Note: When articles are first posted, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page. In a nutshell, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.
I concur completely, I expected apple and amzn to hold, both sold on weak rallies.
I even reapplied my puts even tho I got burned on those this week because we never got what I consider full capitulation…not enough volume to convince me…
Thanks for the insights!
Going to be a most interesting week ahead. I also had to reapply puts because of this risk this poses.