It’s been a good week when not only am I making money in the type of chop we had, but I find myself calm & patient over those other tickers in my account covered in red ink rather than green. [rubbing hands together] Yes, things are going exactly as planned. At least so far.
ES_F broke to the downside on its 7-day triangle with my price target of $1005 (above). Then broke decisively below its Regression Channel yesterday confirming [in my mind] that we have begun a correction here [see left]. In estimating A-B-C waves [and again these are only estimates at this point] I came up with a target low for the correction again near $1000.
Now I heard Bob Pisani was on CNBC saying traders down on the floor are waiting with orders @ $1000. Cool. That’s big buyers folks. Not us little guys. We’re talking large traders with deep pockets – the kind that want to jump in so we can all ride Wave 5 up in this rally.
I sold 2/3 of my ES_F short and inverse on the opening drop @ ES $1013.50 for a tidy profit and just shorted a little again at $1023.50. Consider it opposite of *buying a dip*. We may melt up this afternoon as the Margin window closes and small traders rush to cover their shorts but I’m not too concerned. Next week I expect to see some upside; approx 50% of what we’ve lost since 9/23. Once we hit that area I will short $ES_F with my remaining allocation for this trade. My longer term cover order stands at $1005; no need to be greedy. From that point I will look to add to my long positions to rider Wave 5 up.
One last note: I’ve set an Alert with a cover order for $1050 in the event there’s a second coming and I’m crucified on the short side.