My fears that the impulse wave it looked like we were forming off the 8/16 high might truncate its 5th and final wave may have been justified. Now whether that was the conclusion of a 4th wave for the bullish count, or something else entirely remains to be seen still and I will wait before speculating on that. The two warnings I heeded were that we just refused to go and tag that ideal fib below us, and then, to make matters worse, my bear call spreads were threatened yesterday. I had been expecting the market to at least roll over a little more, moving down and to the right (e.g., here) and my placement of spreads like those often works.
Those fears led me to roll my ITM shorter-duration puts (from an earlier strangle) to OTM and I closed those bear spreads with minimal dignity in the late dump yesterday and took some shorter-duration calls to round things out.
As for today, regardless of whether we’re in a longer-term impulse wave, or some kind of corrective “A” wave up (of some larger corrective move), it seems acceptable to try to count this move locally as an impulse. If so—tentatively—I would put us in this blue 3rd wave somewhere:
As for playing this, since it looks like I caught a 3rd wave of some degree, I have begun peeling back off the calls I took late yesterday and since big pops don’t tend to simply collapse, but can take some time to roll over (all the threes, fours and fives we would expect), I am trying for some lunch money again and have sold some bull put spreads down near that open gap. We should stay elevated long enough for those to decay in my favor.
From here, I will be watching the structure to see if I can begin to start labelling the 4th waves up here somehow.
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