Not the end of this fear (SPY)

21 mar 2020

Anyone else see an Elliot wave forming in this panic? This is obviously only one of many possibilities. I plan to ladder in for the longterm between $171 and $100 (0.618 and 0.786 retracement of the 10 year bull). Jives with an Elliot wave I see forming on the sell off.

23 mar 2020

Nota

In my Elliot wave the 1 wave is people "in the know" selling of with the 2 wave being the rest of us buying up what we think is a good deal. The government starts to take drastic action, people start to panic and sell off forming wave 3. At some point the government will take drastic measures to hold up the economy and a sentiment of this will not be so bad will prevail forming a 4 wave. There is a distinct possibility that hospitals will be over run, healthcare will be rationed, we will have more dead bodies than coffins (this is already happening in Italy). That is when the REAL panic will form a 5 wave. Where it bounces? We need to wait and see. Looks like we dipped below the 1.618 for my 3 wave. Maybe we are heading toward the 2.618 if the fed measures have limited effect. Would love to hear thoughts on this!

26 mar 2020

Nota

We are starting to see the sentiment change, as would be predicted by Elliot wave theory. There is a 2T stimulus plan (which will not solve the larger issues at hand). The US President is stating "I think Easter Sunday and you'll have packed churches all over our country, I think it would be a beautiful time. And it's just about the timeline I think is right." This statement was made in direct opposition of advice we are hearing from the Whitehouse epidemiology experts. This is sparking false hope and a little mini euphoria which I do not see lasting. All of this while confirmed cases and COVID-19 related deaths grow at an exponential rate in the US. Welcome to a classic 4 wave. I'm not sure where it will peak on SPY. My best approximation is $261-$288 based upon Fib-extension. Eventually, reality of our situation will set in. Denial will turn to more intense panic and we will see a 5 wave. At that point I plan to agressively short puts to long the market and ladder into long term positions in SPY between 0.618 and 0.88 retracement of the ten year bull. I don't think all of my positions will fill (I hope they don't), but by shorting puts I'll still be able to put idle cash to work.