Live: Friday, March 6, 2020

1:55 p.m. New York time

The Federal Reserve’s Sahm Rule Recession Indicator has come in at zero for the third month in a row. The indictor points to a recession when it reaches 0.50 percentage points. I start paying attention at 0.20, although, this time around, with the markets tanking my trading is already positioned for recession.

11:25 a.m. New York time

I’ve posted updates to my analyses of two lots of SPY with results of the trades. The lots are SPY lot 1 and SPY lot 2.

I’m going to wait until Monday before considering replacements for those positions.

10:25 a.m. New York time

By my analysis of the chart, SPY (based on the S&P 500) has entered the 3rd wave of the downtrend, at the Minor level. The 3rd wave will go beyond, perhaps considerably beyond, the low so far in the crash of $285.54.

An alternative reading would have the 2nd wave extending in a more complex pattern. It was the strength of the fall this morning, an opening gap, that persuades me that the 3rd wave interpretation in is most likely.

In response, I’ve enter a share position on SDS, an inverse fund based on the S&P500 that moves double the distance of the underlying, for a $28.96 debit.

My short bear call options spreads on SPY (lots 1 and 2) that I entered on March 3 have half of their maximum potential profit. By my rules, I exit at that point, and did so. I shall update their analyses later this morning.

By Tim Bovee, Portland, Oregon, March 6, 2020

Disclaimer

Tim Bovee, Private Trader tracks the analysis and trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decisions for his or her own account, and take responsibility for the consequences.

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