T3 Live

Option Expiration Cliff Dive?


“…a declining trendline connecting the September 2 high with the October 12 high is at the 3220 region.

That is key support on any decline. Breakage back through the 3588 September high that is sustained should elicit a test of 3520 (the 350 SPY strike into Friday Opex in play?)”

We wrote the above in Wednesday morning’s Hit & Run Report.

We followed up by saying there were more chances for bears on a break of Tuesday’s lows wondering if the 3500 SPY strike could be in play into Friday’s option expiration.

The hourly SPX below shows the Acapulco Cliff Dive below the key 3588 September spike high.

The die was cast when the index triggered my Opening Range Break strategy (ORB) to the downside.

This is a break below the 1st half hour’s low at any time during the day.

An ORB was triggered at 3606.87.

Breakage below Tuesday’s opening reversal Train Tracks saw acceleration in the runoff, which resulted in a close below a daily rising trendline connecting the important October 30 low and the November 12 low — opening the door to a support box in the 3400 to 3500 region.

This week's close will be important because a weekly close below the September 3588 peak will have the look of a false breakout.

Last week was a push with the SPX closing at 3685.

Members know that 3588 is key “vibration” because it is square the February 19 pre-crash high.

Blue is 588 in the outer 3000's rung for 3588
Red is February 19 top
Purple is November 21

In other words, the important September pre air-pocket high is square the February pre-crash high.

As well, 3588 is 180 degrees straight across and opposite November 20/21.

Consequently, November 20/21 is square the February 19 high.

This means we are in the time frame where the market has either made a high or will drop into another low.

Interestingly, 144 Fibonacci months ago was the Lehman Brothers crash low on November 21, 2008.

This underpins the significance of this week.

Did we get a false breakout on Manic Vaccine Monday last week?

Let’s take a look at IWM, the Truth Teller, which has had its best month ever recorded. The following daily IWM shows an interesting setup for a possible Acapulco Cliff Dive to 165.

Yesterday IWM closed a hair below a rising 3 point trendline from the its October low.

If it gaps down and stays down, it will leave an Island Top.

Sustained breakage below trendline A opens the door to 165, which ties to the rising 20 day moving average. Below that points to an open gap B which ties to the 50 day moving average and a trendline connecting September and October lows.

The bottom line is there are two large open gaps in IWM which tie to the 20 and 50 day moving averages.

Moving Average Pinball and these open gaps could magnetize IWM lower on downside follow through below the aforesaid rising red trendline.

The 350 SPY strike and 165 IWM strike may be in play into this November “square-out' period.

Leave a Comment: