here’s the Dow’s mapping to finale of ending diagonal. Note the intersection of the upper 2 sdb, the red ending diag. triangle upper line where 5 waves up measure off the Nov. 11 low, as stochs peg at 99%, into Bradley Turn window (on Tuesday 11/20 +/-2 days), with H.O. on clock until Mar. 9th, on day with Vix green along with Blue Chips! WOW, if this isn’t one for the text books, what is?
There is potential for the next few years to see the largest stock market decline in history, or at least on par with ’08, ’00, and ’87
Therefore, this is a very very rare opportunity to take a 400 point risk for a 12,000 point reward. Imagine the few times in history when this was possible? Only the Nas has fallen in excess of 63% in the past 90 years, and a 12k loss on this Dow 19k level would be 63%. But, 7k is not the target for the eventual Dow bottom. 4k +/-1k is. If that were to actually happen, rather than be a hallucination of pattern recognition, the Dow could drop 80%, which would take Nas and Rut down 90%. The more common 90% moves come to the upside, so this speculation is like an opportunity to buy the Dow around 10k, like back in June ’10 at 10,500, risking only 200 points. Had you had the insight back then, you’d have been stopped out, as the Dow fell 10% below the entry of 10,500 to 9,500 or so. So, this is even a tighter risk reward than that long opportunity, which trust me, most humans were still changing their “depends diapers” from the ’08 crash to be able to go long at 10,500, especially since 11,250 had been just seen two months earlier in April ’10. What about the ’09 low? Well, let’s not kid ourselves.
Having just seen the Dow drop from 14,250 in ’07 to 6,550 in ’09, NOBODY wanted to buy stocks at Dow 6,500…except DSE. See these post from Feb. 23-25, 2009: VIEW HERE >> which I wrote a week before the final low: This is the best one from my Feb. 18,2009 alert:
Those that think I’m always bearish could not be more wrong. Nearly nobody was bullish in Feb/Mar ’09, let alone stark raving mad bullish like the DSE allowed me to be. I begged people to buy then, and most refused. But, some saw the light, or at least saw the risk/reward,
This was our “all in” long ladder with final buy stop posted on 3/18/09: VIEW HERE>>
Our minimum calculation then was for at least a 50% rise from 7500 average entry to 11,250, believing the worst case risk would be 6300. So the plan was to be “all in” as close to 7k as possible. That was a 10% risk for a 50% reward. Here, this short opportunity is magnitudes better, as the risk can be set at 2.6% (roughly 500 points on a 19,100 price level), and reward target of at least 60% (targeting 12,000).
Of course, 12k is expected within the next few years, not months, so planning is needed. However, at 2.6% to 60%, the risk/reward ratio becomes 23:1 in favor of the short bet. The real opportunity, if the Jaws of Death really achieve their measurement objective (5000) is 73% lower, or a risk/reward of 28:1. Here’s that picture, which we’ve been tracking for over a year, since the Aug.’15 low being only wave 4th wave down.
compare this pic with the one I drew in Feb.’12, at our W4 workshop in Seattle; some of you were there in person. Back then, this black chart was the alternate count, but still amazing, given the Dow was at 12,900, and DSE allowed me to forecast 18,300.
Now, here’s the fun part, look at my hallucination then vs. the pattern the Dow “generally” followed, and the pattern is now mature. Yes, I know I’m a failure, since the Dow is 800 points above my forecast, but DSE got 87% of the move from 12,900 to today’s 19,100. I’m happy with it. Now though, reward is minute, and risk is massive. Not just the pure number, but the pattern into this price zone, sentiment, economic and social conditions, leverage, margin, derivatives, etc. It’s all there…including the Hindenburg Omen crash warning now on the clock until mid-March. Oh, and Tuesday’s (+/-2 days) Bradley Model Turn date. So, there you go, my stream of consciousness (aka: Kstream) which I’ve been contemplating over turkey, roast beef, stuffing, sweet potatoes, salad, and a lotta lotta football!
Dow 19,120 is the upper trend line of the ending diagonal, so anything above that number is the “throw over” in progress.
Notice the hype in headlines: Dow and S&P “soar” to record highs, says cnbc, which is a bit exuberant given the 0.2% Dow and 0.16% Spx gains.
Here’s my trade, which is hugely leveraged, but controllable. Considering Spx’s triple bearish etf known as spxu.
this gives spx the chance to rise 6% to fill my entire ladder down into 17. That would take Spx to 2340, the upper upper end of our target, and to around 3.5 sdb’s…Very extreme!
My sell stop is 16, come hell or high water. My target is 36 for now. So, I’ll risk around 2.5 points of average entry cost, for around 17 points of initial rise. Or, 6.8:1 reward to risk; a set up I have to take, as a risk-adjusted speculator. Now, I have full consciousness that I may actually have to lose money on this if it doesn’t work. But, if you can come up with a better risk/reward play than this, please send it to me here.
This is NOT a back up the truck play. This is a measured play, testing whether the top will be placed in this price/time zone. Back up the truck will come once pink box is met, pullback is seen, and the 28 +/-2 zone is used to re-enter. This is no more than 5% capital exposure for entire ladder.
If using options, and you aren’t looking at June, you’re an ego driven, riverboat gambler, with self-sabotaging behaviors that need to be addressed by a professional therapist. If this describes you, please contract me for a referral to gambler’s anonymous, as we close your membership here. We love you, but won’t knowingly put loaded guns into hands of folks that refuse to follow the rules of loaded guns. xo