Dow Analysis And Strategy:
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“I believe that it is wise to exit put strategies on any new low. This includes the opening 15 minutes of market trading, if the Dow does not gap higher based on an intra-day short-covering rally that would actually begin at the open.”
“In combination, these 2 charts tell us that PEAK put time premiums have been seen, even though new market lows should occur by ~March 1.”
The 1-year Dow chart and the 3-year charts follow below, respectively. Placing the above in the context of these charts, we may conclude the following:
The market did indeed gap 500 points higher at the open, so the put-combination income and protection hedge program was only liquidated at the close at the 27,000 level. That level was a good one at which to exit positions, inasmuch as the market has since confirmed that 27,000 was the conclusion of this move’s wave-3 down.
Having forecast 27,000 as the end of wave-3, it had struck me as wise to…