After a ruthless and cunning retrace from politicians and central bank talking heads, this piercing rally is coming to an end after reaching the full retrace target at 1250. Buyers, who would like to occupy the jurisdiction above have tried to do so in a crafty way (since the typical path looks out of the question as long as the world remains in lockdown); they have occupied the lows, driven the late sellers out of it and thus created space for this flank manoeuvre.
The RUT position arises after the typical small cap under-perofmance from the panic flows:
The analysis of this position shows us that sellers are once again ready to conduct another leg lower, but also the quick-witted buyer will know to cover on the contact of 1250. As long as this resistance holds, the advance cannot be administered and the nature of the retrace remains corrective rather than impulsive.
A fresh round of bankruptcies will be coming over the next few weeks, I am eyeballing the 16,000 lows in DOW for reference which will carry NQ, S&P, RUT, CAC, DAX, FTSE, NI and the rest of Global Equities.
Thanks as usual for keeping the support coming with likes, comments and etc!
Please keep up updated about the trade. I am not closing, but I am thinking about adding more at these levels. Same for TVIX. I would love to hear your thoughts.
battousai1130
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Thank you @ridethepig for this wonderful commentary. I was in despair to see my April puts expire worthless expecting this to happen, and I was in serious reconsideration if I should reload on puts at all. Your commentary gives me some confidence. You have commented on your retrace targets for RUT, but can you give an approximate idea for the DOW and S&P as well? Either here, or in a different post?
PS: Last time you just wrote your ideas for DOW and S&P in comments and I totally missed it :(
RALBWSB
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Odds are it breaks higher into next week or flat, and then the downward slope begins the following week?
cycliscs
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Hi, first of all, very nice work. I always appreciate your insights.
One question: Why do I see a clear gap up of 1250-60 out of the upper channel on 20 Day: 1 Hour Chart, but other time frames show there are no such break out? Is it significant?
I think we will see downward pressure in next week since the oil cut has not been effective in boosting the overall equity market.