Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Stone's Throw Target Range

Double bottom support was not able to hold and the markets kept plunging before another attempted rally ensued:

<< Double Bottom Support:

<< Intraday Spiral Meltdown:

That's what can happen when volatility are at the extremes. Practically anything can happen. See previous intraday analysis that speculate either follow-thru run down or start of a complex meltdown. Intraday meltdown did not result in a complex 13-waves down.

>> SnP500 Daily:

>> Dow Jones Daily: Use same analysis for SnP500.

>> Compq Daily: ditto.

Dow Jones and Compq are already over-extended iii-rds on the daily charts. Somewhat reverse-similar to August 24, 2015 when SnP500 was over-extended but not Dow Jones.

>> Intraday Analysis:

The run up off Jan 20 low is either an A-B-C bounce up or a 1-2-3 rally. Right now still in 50/50 probability range. Toss Coin.

Tapes today started with a bang well above 3:1 for advancers vs. decliners. Thus, expect continued rally toward the close. And since the weekly bar should be very good; then expect a follow-thru rally for at least the first few days next week.

Check previous instablogs for medium-term analyses.


Trading Strategies:

The previous instablog was designed more for contrarian daytraders with provisions for medium-term traders just in case the volatility setup results in either truncated v-th or the iv-th and v-th not printing at all.

Not suitable for swing traders since the trading range for the iv-th and v-th is still very wide when considered on a risk vs. rewards basis. But then, for those who took positions and wish to execute a swing trade instead of daytrade or medium-term; it's not a bad proposition at all considering that SnP500 has been consolidating for more than 8 months already in a very wide trading range compared to Feb/July 2015.

For Daytraders: Better course of action is to take 1/2 to 2/3-rd partial profits. Perhaps keep at least 1/3-rd positions just in case the markets start a spiral meltup (on the intraday charts).

For Medium-Term Traders: Perhaps taking off 1/3 profits in this run up can prove a wise decision to alleviate angst later if the SnP500 just keeps following the 90% probability of the iv-th and v-th happening toward early February. Discretionary whether to add more positions on a lower low (or even truncated v-th low on daily); OR use partial profits as 'warchest' for extra wiggle room to the downside.

* Myself: As indicated last January 20 on my Comments; I got tired of being stopped out on my daytrades at b/e twice. So I decided to take partial profits on the first potential 1-2-3-4-5 vertical run @15,800 target on the 5min chart that day . As usual, when I start surrendering to whipsawy markets; they go the way I was expecting in the first place and I ended up looking like a stupid fool (... actually, I sold that darn 1/3 YM positions just to cajole the markets to go my way ... he! he!).

Sold another 1/3-rd positions when YM produced a potential a-b-c or i-ii-iii up on the 30min chart toward the 16,064 double top resistance on the 5th day (not bad in terms of days being able to hold daytrade positions --> but not satisfactory based on run rate).

Will sell another 1/3-rd positions on this A-B-C vs. 1-2-3 toss coin analysis after this grueling 8 market days hold for a daytrade.

Bought a few SSO back then as possible swing or medium term so I don't feel like being left behind. Got very little cash these days and I don't want to leverage after 6 years of rally off the March 2009 significant bottom. Thus, will just have to keep daytrading these markets as much as possible using the eminis. A progression from more swing trades, from June 2013 to June 2015 --> as markets rallied into a momentum run in Nov2012 to May2013 setting the stage of reduced momentum on the remaining run ups after that vertical run of 7 straight green months. And started deleveraging my account from 155% max in Dec2011 to 115% in Dec2013. I was able to raise 10% cash for short-term trading purposes with 5% allocated to YM trades (for deposits on overnight holds).