Something potentially very ugly happened this morning – I am not sure if it’s coincidence or if this was yet another setup to punish the poor battered bears. Either this is very good – or very bad. The good news is that we’ll know very soon:
Alright – pick your poison:
Among all the whipsaw hoopla this morning some may have missed the fact that the SPX busted what I had previously counted as a first wave of a developing motive.
Now, thus far we are okay – assuming this is Soylent Blue. If it is not Blue and we breach 1120.95 then it may get very ugly for the bears – very ugly. Because the best way to count the recent drop would be as a second wave inside a third wave – to the upside. And although a third wave does not have to be the longest – it however can’t be the shortest. Which means that if we breach 1120.95 on the SPX the upside potential for Soylent Green has just been extended. Ouch!
What To Do – What To Do!
No reason to panic however – actually this might make for a great trade setup. Stay short until 1120.95 – if we breach it a bull call spread or even a bull call ladder with the second short leg above this year’s highs may be good medicine. If you have no clue what I’m talking about – then you might catch up on our ongoing series on EWP Option Strategies.