Clearing The Path To Trading Success

If the volatile S&P’s have you a bit unnerved and bit out of synch…..I get it.

These types of markets can be a real challenge if you have limited experience dealing with them. But don’t worry, I have lived, thrived in fact, during phases where price action gets a bit unruly. That is where experienced traders can really shine. In this week’s post I provide you with some key insights on the S&P’s so that you can remain focused and confident.

Making Sense From The Chaos

What a trading week. If you wanted to volatility and large trading ranges…you got it. Sadly, for many, those types of markets are not only unfamiliar but unnerving. Today’s update is meant to offer some clear insights on how to handle this type of price action.

We have been long an April 2 258/272 Put Spread since March 5th. We booked partial profits on Friday for a gain of just over 200%.

But now what?

While my initial sense was that the S&P’s could move lower towards 2525/2550 and perhaps 2450….we might want to consider that Friday might have been the low….for now at least.

From a technical perspective, forecasting where prices are likely to move is typically a function of symmetry/measured moves. That being the case, if we measure the move lower in February (Wave a), about 350 points and then project that from the high in March (Wave b) – an equal leg lower would be at 2457.

However, often times the last leg of a correction can stall at .618% the length of Wave a….in this case 2591….Friday’s low.

Given that we can never know which outcome will play out with 100% certainty (Thinking in Bets), at least consider this area as a possible low.

I will be going into more detail about this type of analysis at the Trading Workshop in London on May 2nd. Early bird registration ends April 8th. I look forward to seeing you there.

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