4125 was the highest intraday which was also a prior Aug bearish reversal that was elected (but the Socrates System did not publish it elected). This was the area of insurance regardless as there was too much risk to downside. The 4125 is shown as a red dotted line on the chart below.
The play (discussed from 3900) was perfect from 4125 and a bit of luck simply wanting to protect downside movement in this market. The best trades are the hardest to enter, yet if I know the risk of being wrong. It makes it a less emotional situation.
SPX Downside Insurance Played Well
For long portfolios, I would need to keep reminding myself of how fast markets move down. So SPX short was added on the Friday close. (NasDaq on the Tues close). I never double add positions on same day, due to I am usually wrong on time by a few days.
The purpose of this insurance was just to be calm during downside to help think clearer. After today’s close the market is super emotional and yet I am calm as a cucumber waiting for another low risk trade.
Last Weeks Play
The chart below shows the setup before the short. Also reported here.
NasDaq Short Off August Bear
Yesterday another short was placed due to massive up moves for 5 days and all being high closes. Finally on the 5th day the monthly elected August Bear Reversal (which was elected) was retested and risk was minimal on upside and reward was good to downside — especially being in a down trend.
Notice the trend lines as well. The prior high to the 1st low worked in this technical scenario.
What’s Next…
Still too early to say as todays move was 4% down just about and this can give off some reaction back upward. We held the prior weekly low so that will be watched from here on till Friday’s close. Lot of folks I imagine are getting out of the market and this can open up opportunities. The volatility is tough and causes the markets to move fast on these down moves.
Looking At Seasonality
We can see in the S&P500 the end of Sept or beginning of Oct can give a nice risk/reward trade to upside. So now we are waiting and looking for support areas to bounce off during these times.
Will post more as the market shows opportunities. To go long here still remains to be seen (it may be possible in a short term, but that Oct move looks more rewarding). The week’s prior low is being tested and will review reversals at end of the week and next main turning points.
Watching Oil Plays for a long term setup as well…. do price caps by governments increase oil prices like they did in 70’s?