One Strategic Note on $SPX

As noted just a short while ago, we may be entering Green 5 now (instead of blue 5 of Green 3). This consolidation just seems too big to be the four of a lesser degree.

My head is still on a swivel for some kind of surprise soon, and I’m not sure what it could be. As noted over the last few days, it could be that as we get to where Green 5 should be, it turns out only to be 1 of that 5. I will discuss another possibility. Green 5 should probably see parity with Green 1 (the 1:1 ratio I have placed a small orange circle at below, down at 4083).

If we do something weird today though like slam into the 50% into the close making a double bottom (the higher of the two orange circles), it could also be that that’s that end of Green 5. Fives are most frequently half as or just as long as their corresponding wave “ones.” So this would also take people by surprise, I would suppose. I bring this up only because that 50% extension happens right at the prior low.


So here’s my plan. If we do slam into any fib into the close, I will probably close my bear call spreads as a precaution, then roll my long puts (which are ITM right now, shorter-duration and came from my recent strangle earlier this week)) to OTM for a credit and take some calls. I will keep my long-duration puts. This way if we continue much lower for Green 5 (or 1 of that 5), I will be fine, but if it turns out to be a surprise bottom instead, I won’t be risking the spread collateral and I will have something on for a rally that might show up.

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