Let’s Look More Closely At the Trappy Bullshit Count

Now that I have had more time to look at things, I am becoming more intrigued by what was mere speculation a few hours ago (second chart here).

The knee-jerk way (for bears) to count the structure is perhaps like this:

SPX

Namely, that this drop was a blue 3, this choppy stuff a blue 4, and we need a 5 to finish things up. And that was where I, too, leaned this morning as I tried to count the opening decline and consolidation as a single wave (here). Now whether that’s a nest (a 1 of a lower degree) or the outright 3 as above, remains to be seen, but, one problem I had is the lack of any fib relationships between the blue 1 and the blue 3 as labelled in the chart above. And since there is no relationship, we may conclude that they are not related (the move down for blue 1 and the move down—as labelled at that low—for blue 3.

And that is why I began to look for an alternative (such as the speculative idea here). And so, if we do already have 5 waves done, I can justify that much better as there are fib relationships between the waves when we count it like this:

SPX

Interpreting it this way gives us a good relationship between Blue 1 and Blue 3, and Blue 1 and Blue 5. Much better this way.

Now, what will that mean going forward? Unfortunately, it may mean that we will become rangebound. The good news is, these can be very fun, too.

Here is how this might work (if we see strength starting Sunday night).

If we’ve completed minor (green) 1, we need to see minor (green 2) next. That should be a 3-wave move (blue a-b-c). Right now I am completely guessing where it can head to, but if they do run to close that gap from the 16th/17th fully, we won’t violate the 8/16 high, and after all of that we will then need another 1-2 (in blue). And you can see, this will make us remain rangebound in between the 200-day SMA and the 89-week SMA, while they take time to distribute stock.

SPX

It would be sensible to do so, and if they do, they’re going to use 50 million traders’ short-dated options premium next week to do it. Bulls, seeing the bull flag, will try leaning into the long side, and so smart money will sell into that, and bears (knowing this is a top) may lean into the short side, and smart money will support it until bears cover or their options expire (making them buyers, which smart money can then also sell into), giving us this range for a while as they frustrate everyone to death.

So, let’s see what happens, but let’s not dismiss this right away. It would make sense for them to take the time to distribute up here if we’re going to drop a thousand points soon. Really though the good news is, foreseeing this can make a lot of money. While everyone is throwing themselves at the market, you can try to play the ping pong battle with short-term overnight trades and sell premium at the extremes, and sort of hang out for a week or so while Fintwit turns into a frustrated river of tears and anguish.

We gap down on Monday, forget this idea, as it means it’s showtime now instead of later; but if we don’t, I’m going to try to play this in a composed manner.


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2 thoughts on “Let’s Look More Closely At the Trappy Bullshit Count”

  1. What happened to “follow through Monday”? Only the bulls get that? Not fair!!! I want my “follow through Monday, bear edition”!!! Also, why sweat it with short timed options or risk big selling them, if market does something brutal? I like being short SPY & 100 P/E stuff, hoping fundamentals take over momentum… if my timing is off, I can always hodl until the moment comes. I know in the end, I’m only as good as what my luck lets me take home. Good Afternoon, Good Evening and Good Night!

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