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Risk Windows for the Week of June 24th & On the Cusp


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#1 Douglas

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Posted 22 June 2024 - 06:52 AM

According to my risk summation system, the windows this coming week or so with the highest risk of seeing a turn in or acceleration of the current trend in the DJIA are a window stretching from near the close on Monday June 24 to near the open on Wednesday June 26th and a window stretching from Friday June 28th through Monday July 1st. 

 

Last week the Monday the 17th risk window caught a 400 or so point acceleration 3rd or C wave looking rally.  The Friday risk window may have caught a top of some sort depending on what next Monday the 24th brings.

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The nasty looking divergence in the SPX AD line that I pointed out is still there as is the NYSE new high - new low one definitely making it at least seem like the market might be on the cusp of turning down.    

 

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My short term EWave count below is also looking for a turn down, but will be a bit stretched if the "2" goes much beyond the 61.8% retracement where the box "c" roughly equals the box "a".  So if next week is up or even flat, this count is probably heading for the trash can.  

 

5PKfYme.png

 

Regards,

Douglas



#2 cycletimer

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Posted 23 June 2024 - 06:46 PM

Many well known cycle analysts have been dead wrong on this current time frame being a LOW. CYCLE WORK IS GREAT BUT.price rules. Originally I also felt the July 24-27th time frame would mark a low. When the resilient market kept pushing higher, especially the Nasdaq, I flipped my thinking and I believe this forthcoming cycle marks a TOP, not a Low. Given that I day trade by fading the gap most mornings (little or no gap of at least 10 ES points, means I take the day off) and hardly ever enter positions to be held overnight, I usually dont trade cycle turns like I used to.

Last week I posted that my gut told me to go short. I guess Im scared money because I exited the SQQQ the following day for a measly $400 profit and that put trade? I made $126! The call credit spread was a different story, I made a decent profit of a little over $3000, having held it thru last Thursday, taking advantage of the premium erosion over the midweek market holiday.

Be watchful for signs of a top this week, these divergences youre showing in these charts validate this.

Edited by cycletimer, 23 June 2024 - 06:46 PM.


#3 Douglas

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Posted 24 June 2024 - 05:16 AM

cycletimer, many thanks for your response.  Usually my posts only elicit radio silence.  I've attached one of the better recent shorter term cycles that I track below.  It's an astrological cycle, so next time someone giggles when you mention astro cycles, show them this one based on the minor moon phases.  My risk windows track turns which can be tops or bottoms or acceleration in the trend direction if the cycle turn fails.  Based on the current trend being up, I expect a turn down in the next risk window which opens up late today.   If not this risk window, then at the latest a turn down in the risk window opening at the end of this week.   If the turn fails to appear by then, there's probably a risk of a blow off acceleration up which will deep-fat fry shorts and kill my primary EWave count above. 

 

I am disturbed that quite a few previously reliable cycles that I track have stopped working.  I am blaming the wild amount of liquidity being pumped out by the FED/Treasury amalgamation for damping any selling which might create turn lows.   Seeing this absolutely mad money printing, I feel like I'm watching an M. Night Shyamalan disaster movie unfold. Given the plot line and the director, I know something really bad is about to happen, but I'm just stuck there in my theater seat powerless to stop it.  Unfortunately unlike most Hollywood movies, I can't see this FED/Treasury produced extravaganza having a particularly happy ending.  

 

ikVnGhS.png

 

 

Regards,

Douglas



#4 4caster

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Posted 24 June 2024 - 08:30 AM

If you overlay the MCSUMRNAS on the daily COMPQ chart you'll see an even more 

dramatic divergence.



#5 cycletimer

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Posted 24 June 2024 - 10:26 AM

Douglas,

Thanks for sharing the Astro cycle chart, it's a good one!  I might I suggest send it updated weekly when you post your weekly risk window charts.  I know what you mean about certain cycles not jiving with the market direction.  This is why I've changed my trading strategy dramatically since last year.  I simply fade the opening gap with $SPX options.  If market gaps up I buy puts and vice versa on down days.  The larger the gap the more reliable and profitable the trade.  The reason is because the opening option prices are exaggerated.  I look at cycles and pay attention to them, but I don't trade them because my ave. trade duration is less than 1 min.  On Friday my trade time was a mere 3 seconds.  Today it took forever, the length of my trade (I purchased at the money $SPX calls) was 9 min. ($1517. profit)

This way I make my daily profit and call it a day.  



#6 12SPX

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Posted 24 June 2024 - 10:37 AM

I'm curious cycle, if the trade goes against you what do you do?



#7 cycletimer

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Posted 25 June 2024 - 05:50 AM

I'm curious cycle, if the trade goes against you what do you do?

If you’re talking about my gap fade trade. It’s best when there’s a huge gap of 20 or more ES points. Smaller gaps are riskier. The few times the trade has initially gone against me, I added to my option at a lower price and basis and patiently waited for the price to turn around which is always has. This trade has lost money twice in 2024 and both times the losses were manageable.  You realize quickly whether or not the trade will work and you say to yourself, “I’m wrong!” and either exit or exit and reverse.  I took a $4600. loss on puts, reversed and exited the calls minutes later with a $12,000+ gain. 
note, this trade has worked so well that I’ve been scaling back with less option contracts. When I first discovered this arbitrage trade in September of 2023, I was only trading 15 contracts, then as it became a daily success I increased to 35-40 contracts each trade. Now I’m back down to 20 contracts.  I’ll keep riding this train as long as it’s going down the tracks but I am realistic enough to realize this this fade the gap trade won’t last forever.  In which case I’ll stashed all my gains into fixed income CEF’s and 2-year T-notes.  
since February 5th this trade has produced $212k in profits and I’m adding to my fixed income positions on a weekly basis, using my weekly gains.  



#8 12SPX

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Posted 25 June 2024 - 08:00 AM

Awwww, do agree on the pops up as they generally are sellable.  the biggest thing I have been doing the past couple of year is selling the weekly and dailys as they get insanely priced similar to the one you had quoted last week.  I think we are switching to a volatile time now so should be good trading both ways I think...



#9 cycletimer

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Posted 25 June 2024 - 03:10 PM

Awwww, do agree on the pops up as they generally are sellable.  the biggest thing I have been doing the past couple of year is selling the weekly and dailys as they get insanely priced similar to the one you had quoted last week.  I think we are switching to a volatile time now so should be good trading both ways I think...

It’s been a winning strategy for me though some days my profit might be small (today’s profit was $1163. but trade only lasted 90 seconds!) and other days I capture 2 points or about $4000. I also use dailies for the gap fade trade.