Are we setting up for a 5-10% pullback pre-election?

٢١ أكتوبر ٢٠٢٤

SPY looks exhausted here and everyone is extremely bullish at the highs. Sentiment is at extremes and we have demark combo 13s that triggered at the end of last week. On top of that, we've been moving up in a rising wedge that looks set to break down.

Also, if we look at the chart, there's an imbalance in price action as we have largely gone straight up since the August 5th low and the area I've highlighted hasn't been retested at support.

All this leads me to believe that we should see a 5-10% pullback in the next couple of weeks prior to the election. Why in the next two weeks?

From a candlestick perspective, we're starting a new 2D, 3D, 2W, 3W candle today which leaves the possibility open of a trend change to start today. I expect the move to play out before the election.

I'm playing this idea solely through volatility calls which I averaged into Wednesday-Friday last week.

Let's see if it plays out.

٢٣ أكتوبر ٢٠٢٤

ملاحظة

I'd like to see today's price action close below the rising wedge to build confidence in this idea, but so far looking good.

٢٥ أكتوبر ٢٠٢٤

ملاحظة

Restesting the wedge, should see continuation downwards next week.

١ نوفمبر ٢٠٢٤

ملاحظة

I don't think we see anymore downside. I exited all of my long vol position yesterday.

Looking for plays to the upside now.

٢٢ نوفمبر ٢٠٢٤

ملاحظة

Have a feeling the downside targets are still valid and that we'll see them tagged in the near future.