Live: Thursday, April 23, 2020

10:30 a.m. New York time

What’s happening now? The S&P 500 has retraced a Fibonacci 61.8% of its decline from April 16 and is approaching the upper boundary of its channel (the dotted black line in the chart).

What does it mean? The Fibonacci level and even more so, the channel boundary, are common reversal points to the downside at the end of  a rising market. The correction appears to be nearing its end.

Screen Shot 2020-04-23 at 7.10.19 AM

What does Elliott wave theory say? The rise from from April 22 is wave 2 of the Minor degree . The first leg of the rise, wave A of Minute degree peaked on April 22 after retracing 50% of the Minor wave 1 decline. The Minute B wave was shallow and swift, and has been followed by Minute wave C, which appears to be in its most energetic phase, the 3rd wave of Minuette degree. The end of Minor wave 2 will mark the start of the Minor 3rd wave, which will carry the price down a minimum of 700 or so points, to the 2100s, and most likely well below that level.

What is the alternative? Minor wave 2 could by the rules stretch out into a complex form, such as a double zigzag. This isn’t the usual shape of 2nd waves, and I don’t expect it.

What about my trades? Holding on amid heavy losses to my three short bear call options spread positions on SPY: Lots 12, 13 and 14, all expiring May 15. (The lot numbers link to the entry analyses.)

Terminology. Here are some links to information about some of the technical jargon I use.

By Tim Bovee, Portland, Oregon, April 23, 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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