A widely-read publication that tracks Elliott waves has, over its three most recent issues, stated up front that:
"A last burst of excitement has carried prices above last week's highs in what should amount to the final subdivisions of wave c (circle) of 2."
and, in the following issue……
"The wave formation as well as the accompanying technical condition continues to indicate that the rise since the first days of July is close in time to reversing."
and then, the next issue……..
"The wave structure of the market's near-term advance is very close to ending..which means a trend reversal from up to down in stocks. The next leg lower is fast approaching."
It all reminds me of a term from the software business that I learned back in 1990: "Real Soon Now" – which usually means, "probably before we have successfully colonized Mars."
This isn't meant to make fun of EW, but it certainly captures my frustration at the grind-the-bears-up market we've seen over the past 5 weeks.
I have postured myself thusly: I have a very, very large long position on the SPY, and I have 234 mostly small positions on the short side.
I do not intend to hold the SPY for more than a week – – I might even sell it tomorrow, but I will have to see about the Fed reaction. But the fact is that bears are absolutely at risk of another 50 points slapped onto the /ES, and I just don't have the intestinal fortitude to hold on to a 100% short position, which is 140% margined, against that kind of headwind. It will, psychologically, be very beneficial for me to have one very large position thriving in the midst of such a rise while I bide my time for the sake of my shorts.
It has been 22 months since the 1937-1942 analog dawned on me, and although I have failed to fully take advantage of that insight, the fact is that the analog itself hasn't missed a beat. But Fed days can be insane – – only the Lloyd knows what they might have up their sleeves – – and I'd like some insurance in my back pocket to carry me through.