Just a follow up thought to the prior post. That wedge on futures did break up. On the cash session, I can see one good fib extension (the 1.618 noted in the chart below). IF that is a whole structure now complete (what I have labelled as “Pink A”), then the failure to break this orange trend line down can mean that we are set to rally. If it’s a pink B, it may go as high as it wants including even above the August high (though I’m only noting that and am by no means calling for that).
I’ve placed a few trend lines here. The orange trend line that I had rather seen us break down, the red wedge-like structure and the green trend line governing the whole decline (these are reference points to see what we do if we get to them).
In response to the strength here, I have pitched the rest of my puts, kept the calls from this morning and have sold some put premium below these latest lows (bull put spreads). So, let’s see what we see, but without some weakness, it may be a sign that positioning is too short, and it needs to be shaken off first, so let’s see.
My positioning changes are risk management: I would rather miss the decline altogether (if we’re still going to get it) than to get butt-fucked by a rally (the outright long put position I had was larger, these new positions are smaller, and will give me time to allow for a rally and also just watch for a bit).
One thought on “A Look at Cash $SPX”