The $SPY has been on a tear with 2 consecutive days of nearly 1000 point moves and now we are coming to some crucial resistance levels. 1 is the 50% retrace of the 3rd wave move down and that is $251.40. Now the bottom of wave 3 is $253.36 meaning that the retrace we have seen so far has $2 more to go before coming down. After the
As of Monday the 31st we had a bull flag set up and looks like the move up is going to be the 5th wave move to go test the resistance of $253.36 and after that the wave should start coming down. The mistake I made on the Fridays trade was that I assumed that we topped out of the leg up on the triangle and that the next move was that of the move down on the leg down of that triangle. The last day of the year did not have enough volume to make big moves that the range was 300 points from 247.50 to 250.50. The RSI is at 41 but that can be a fake out move to just pop its head above the come back. Waiting for the move to go up and come back to take a short trade!
Update as of January 2nd
The wave count seems to be getting confirmed after today’s after market action because of Apples revised lower guidance. The 4th wave was at its top the past 3 days were trading in a tight range. Took some put options and looks like they are going to be in the money tomorrow and some good gains!