I mentioned shorting this wacko-powered gas-bag in the The Morning Line, which is publicly viewable, but without divulging any proprietary details. Ordinarily I would advise waiting for SPX to hit the D target at 3477 (see inset) before we place a bet. In this case, however, I have a strong gut feeling that the target may be too obvious to reward us for doing what many others who use ABC or Gartley 1-2-3 patterns will be attempting to do. Bull markets have been known to die somewhat shy of picture-perfect D targets like this one, and I don’t want to miss a great opportunity to bet the ‘don’t pass’ line if that should happen here. It is not incidental to my argument that hubris surrounding the stock market, the economy and Trump’s presidency has reached a deafening pitch. Everything seems just a little too perfect, and the bull market has no right anyway to be rampaging at a time when the coronoavirus threat to the global economy is still unknown. China has already shut down economically, and commodity markets, especially oil and copper, have fallen sharply to reflect this, even if, conspicuously, the crazed U.S. stock market has not.
I mentioned in my Morning Line comments that we will have an enticing opportunity to make money on this trade even if the S&Ps turn around after falling and surge to new record highs. Odds are good, in my estimation, that once they hit the X trigger at 3199 they will fall to at least p=3051, where we could take a partial profit or perhaps cover the entire position. Here’s a chart that shows the pattern, with the rABC shorting set-up. Those of you who trade futures can interpolate using the E-Mini S&Ps, which move almost point-for-point with the cash CBOE index. You will also be able to buy put options pegged to SPY. I have not offered a comparable trade in DIA because, unlike the S&Ps, the Dow Industrials have not even reached p2 of the same pattern. However, it will be easy to interpolate a short in DIA by simply buying puts if and when SPX/SPY falls to the trigger price. Stay tuned to the chat room if you’re interested, since this trade is likely to be followed avidly by our resident Pivoteers. _______ UPDATE (Feb 18, 10:06 p.m.): If the so far all-time high at 3385.09 were to hold, the ‘rABC short’ flagged above would trigger on a drop that touches 3236.51._______ UPDATE (Feb 19, 8:25 p.m.): I’ll continue to raise the trigger price on the short trade as SPX wafts to successive new record highs. Based on a current high of 3393.53, the trigger to get short lies at 3244.94.