Live: Tuesday, March 10, 2020

3 p.m. New York time

The markets haven’t declared themselves yet, and so I’m deferring entering new bear call spread trades until there’s greater clarity. If SPY (tracking the S&P 500) resumes its downward course, then I see it as a continuation of wave 3 to the downside, and will place trades. If it continues the net sideways path that we’re seeing today, then I shall conclude that we’re in the Minor 4th wave within the Intermediate 1st wave that began February 19. I don’t plan to trade the 4th wave and shall sit it out until the 5th comes along.

12:15 p.m. New York time

I shall begin the day with an Elliott wave analysis of the S&P 500 chart (SPX). As everyone knows, Monday saw an intense decline followed this morning by a bounce and a retreat.

I have only one short bear call options spread position at present, and need to add another so I can continue to capture Minor wave 3 to the downside. Yet, the bounce the troubling, since if it means an upward correction, that cause losses to my bear plays.

Everything is in motion, nothing is for certain, and analysts draw conclusions at their peril. None the less, let’s try to at least think of the possibilities.

Screen Shot 2020-03-10 at 9.12.07 AM

The bounce this morning was 4.2%, and the drop back has moved below yesterday’s low. Before the drop back I was inclined to see the bounce as possibly being the beginning of a wave 4 correction to the upside, ending the 3rd wave down that began March 4.

However, within Intermediate wave 1, that would make Minor wave 3 shorter than the Minor 1st wave, creating an assumption that the future wave 5 would be shorter still. It requires a truncation of Intermediate wave 1 that seems contrary to the power of its decline.

So I’m inclined at this point to see the bounce as just another smaller wave within the continuing 3rd wave decline. I’ll watch things for awhile, and then add more bearish spreads if the SPX chart is playing out as I think it will.

By Tim Bovee, Portland, Oregon, March 10, 2020


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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