S&P 500 Projection

2 May 2020

The S&P 500 has been on an incredible rally since the bottom in March. We called 2176-2050 as a high probability reversal setup to get long in a major way. It worked like a charm and set a price target of 2933 when the market was at 2200. This week at 2900, we decided to start trimming back our longs (shares and calls) and began loading up on puts for a significant pullback. I have been playing with 2 potential downside scenarios. As price continues to develop, that picture will become even more clear. In this scenario, we completed a larger degree wave (4) down in March and we just completed a large wave 1. We are starting the wave 2 pullback where a typical wave 2 pullback is the .618 which coincides with weekly demand at 2500. Great place to get long in my opinion.