Market Update

The New Year has started off with a ‘bang‘ (in Baghdad).

Let’s take a look at the current broad market setup in multiple timeframes using the S&P 500 Futures as our proxy…

 

 

The news of the long overdue death of Iran’s top mischief-making general initially tanked the futures, but not before first taking out the early bear stops just above the all-time highs, of course.  The pros usually seem to know in advance when something big is coming.

The current setup from Stops and Targets shows the poke just above yesterday’s highs, followed by a sharp decline that triggered a new Top Spotter signal and then bounced after taking out the bull stops under the intermediate stop/reverse line.

We’ll see what happens as the day goes on, but the major line in play today should be that intermediate support, which is currently at 3222.50

 

 

click image to enlarge chart

 

On the monthly bar chart above, you can clearly see what a great year 2019 was–after the bounce from the bottom edge of that trend channel at the close of 2018 (see green highlight).

Note that since the VLT (very long term) secular bear bottom in 2009, there have only been three major monthly buys at the rising bull channel bottom (see dashed lines on the chart above)–and once those channel bounce rallies get going, they have been very good up until the point where we start to see a lower high form on the monthly bars, and then the initial sell for the counter-trend pullback kicks in at the first break below a previous monthly bar low.

Since the current month (January 2020) is showing a higher high, it doesn’t seem to be setting up like major previous pullbacks–but I’ll be keeping an eye on what happens ahead now that the hornet’s nest has been kicked hard in the land of never-ending wars.

FYI: Professional bears will likely be using last month’s high at 3254 as a line for establishing counter-trend short trades.  Major selling in this timeframe would not kick in until/unless we were to see a break under 3072.25, however.  If we do see a pullback develop starting in the shorter timeframes and then cascading, the trove of trailing stops located under the previous monthly bar low (currently at 3072.25) would be the first major pullback target on the monthly bar chart.

 

So, bottom line here is just what Stops and Targets is saying in the long-term analysis tab… last range envelope signal: range top counter-trend sell at 3254.00 TODAY”

 

 

 

The markets have been on an absolute tear since the last Weekly Bar Paradigm buy signal a little over a year ago (see point 10 on the weekly chart above), setting up three new weekly higher lows since December 2018.

It’s been awhile since we had a pullback deep enough to potentially challenge the last higher 4-bar pivot low, and that Weekly Bar Paradigm hard deck line is way down at 2857.75 at present.

 

The intermediate counter-trend sell signal at 3254 has already reached the initial target of 3222.50, and as I mentioned at the start of this post, that is the line currently in play.  A new break below 3222.50, that does not recover, could target the bottom of the weekly bar channel, which is currently at 3072.25

It’s all about 3222.50 here.  Price action is bullish above/bearish below.

 

 

 

And finally we come to the daily bar/range chart (see above), which has all three timeframes superimposed to show The Big Picture.

Bottom line here is still the major support line at 3222.50.  If that support goes, then next target lower would be confirmed support (old resistance breakout) at 3160.75

Happy New Year!

…my .02

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Options Rollover Day

 

Futures Options have now rolled over from the December 2019 to March 2020 contract with a difference of +2.75 points from ESZ19 (December) to ESH20 (March).

All previous chart numbers have been adjusted to reflect the new contract pricing—so, for example, the Long Term stop/reverse line from the expiring December contract at 3033.00 now becomes 3035.75, and so forth.

 

 

 

My updated daily bar/range chart above shows the current broad market configuration–for comparison to the Stops and Targets analysis for S&P 500 Futures screen capture at the beginning of this post.

We got a big spike in the markets this morning on an as-yet unverified (as I type) rumor from the Wall Street Journal that President Trump has a deal in hand with the Chinese. (I am personally very skeptical on that rumor, but we’ll see)

It’s currently all good for bulls above the stop/reverse lines… but be be very careful here (in my opinion).  Market might be potentially volatile ahead due to a number of upcoming big news events that will hit between now and the end-of-year quadruple witching expiration, which is coming on December 20th (also the day the US Federal Government funding expires).

…my .02

 

 

 

 

Market Update

In my last post, I wrote…

For things to start flipping south we would first see a negative quote price, followed by a counter-trend sell alert on the range envelopes, and then a move underneath the stop/reverse lines–starting with short-term, then intermediate, and finally long-term.  With a break underneath the short-term, the next major target lower becomes the next lower stop/reverse line, etc.  See how all that works?

Today the pros decided to flip the switch and yank the rug, so head’s up…

 

 

 

On the daily bar/range chart above you can see that we have a potential Top Spotter alert, an outside bar, and a stop sweep under the intermediate stop/reverse line.

That’s the way these guys roll, can’t say we didn’t see this coming–>especially since they like to go for the shock and awe approach around holidays when many folks are distracted.

Key lines to watch as this attack unfolds are as follows…

  1. The Top Spotter alert is at the bar high (ES 3158)
  2. The short-term sell was at 3139.50
  3. The initial target for the takedown is the stops resting underneath the intermediate stop/reverse line at 3116.50
  4. Also, note the current bounce off the short-term support trendline (light gray line on the chart above)

So, the first key line to watch is the intermediate stop/reverse line at 3116.50.  Once the pros are done digesting stops underneath, that would be the place where bears would initially start to cover on a move back above and aggressive bulls would buy the dip for a possible snapback rally.

If we don’t see a sustained bounce from the initial takedown to harvest the intermediate stops and the day closes under 3116.50–then the game is to start watching for lower daily bar highs to form on subsequent days–>if the pros decide to head down to the long-term stops currently located under the November monthly bar low at 3033.

If we do get a sequence of lower highs forming on daily bars, then something of substance could be afoot for the bears.  If that sequence does build, then we start to watch for an eventual cross back above the last daily bar lower high.  That is where major profit-taking from savvy bears aligns with a signal for a bounce with the most recent lowest low (range bottom) serving as the hard deck for counter-trend bulls.

As a trader, I am happy to finally see some action.  This market has been b-o-r-i-n-g in recent months.  🙂

Let’s see what the pros have in store for this engineered takedown.

…my .02

 

 

 

 

 

 

 

Market Update

It has been awhile since I last posted an update, so let’s take a peek at the Big Picture by looking at the three major trading timeframes of the S&P 500 Futures Option using Stops and Targets and my charts…

 

 

The screen capture above comes from Stops and Targets and shows a summary analysis of the current configuration of the S&P 500 Futures Options.

My eyes always start at the top left of the analysis page then scan across to the chart and finish finally at the block of analysis text…

At the time I am typing this –> the futures are up slightly by +1.50 and I see that the multi-trend configuration is fully-bullish (Bull 10 rating) and all three trends are up above the short-term stop/reverse line, which is currently sitting at 3,116.50

The most recent range envelope signals are all upside breakouts at 3,133.50, 3,132.50 and 3,055, respectively.  The short-term and intermediate trends are trending bullish and the long-term trend has broken out to the upside of the previous range.

So, bottom line here is that it is all good for the bulls above the short-term stop/reverse line at 3,116.50

For things to start flipping south we would first see a negative quote price, followed by a counter-trend sell alert on the range envelopes, and then a move underneath the stop/reverse lines–starting with short-term, then intermediate, and finally long-term.  With a break underneath the short-term, the next major target lower becomes the next lower stop/reverse line, etc.  See how all that works?

It takes just a few seconds to quickly size up any tracked security using that basic workflow.  For times when you want to really dig into the details, then carefully read the block of analysis text.

Now, with that all said–this market might be extended here and has definitely been ‘climbing the wall of worry’ associated primarily (in my opinion) with the embarrassing antics of the increasingly-desperate globalists.

 

So, let’s dig in a bit deeper and carefully compare what Stops and Targets has summarized above with my timeframe charts that follow.  As many of you long-time readers know, I use monthly, weekly, and daily bars (to identify long-term, intermediate, and short-term strategies respectively)…

 

 

Let’s start by looking at the monthly bars for the long-term and very long-term picture…

What I really want to point out are the 12-month pivot highs and lows marked by red and green dots on the chart above.  As I have stated many times in the past…my definition of a bearish market is a series of lower highs and lower lows.  On the chart above, you can see the bear market from 2000 to 2009 had a series of lower high pivots (see red arrows and red dots).

The bear market bottomed in 2009 and formed a 12-month pivot low there (the lowest low of 12 monthly bars, both to the right and left).

Since the market bottomed in 2009 there have been two higher 12-bar pivot lows formed (see long green arrows).  Interestingly, there have been ZERO 12-bar pivot highs formed since 2009!

We are about to officially form the THIRD higher 12-bar monthly pivot low at 2,328 from the December 2018 pullback low.  (see the green shaded highlight on the chart above).  That new higher low will become official if price continues to trade above that line through the close of next month’s bar (December 2019).  If/when that happens, then the very long-term trend line will move to connect the last two higher lows at 2,328 (December 2018) and 1,797.25 (from February of 2016).  See how that works?

Note that the last major bounce at the December 2018 low occurred right at that very long-term trendline (see shaded green highlight) and was pointed out right here in real time.  🙂

So, needless to say, knowing where that key trendline lives is critical to understanding how savvy pros determine the difference between a secular bull and bear market.

Note on my chart above where I highlighted in yellow the official end of the secular bear market way back in 2012.  At that time I wrote ‘this is a huge deal!’ in a post pointing out that technical analysis breakout here in real-time.

Eventually this amazing bull market is going to run its’ course and enter a new secular bear.  We will know when that happens when the pattern reverses to break the support trendline and eventually starts to build a red resistance trendline formed from lower highs.  We are far away from that point, obviously–but the trick is to see the budding reversal coming LONG before the official trendline break –> and the way to do that is to watch for the first break of a previous month’s low in a trending bull market, because that always HAS to happen as a precursor.

As I type, the previous month’s low is way back at 2,855 (see long-term range envelope bottom at Stops and Targets) but once November closes out and December trading begins, the long-term range envelope bottom will move up to this month’s low, which is currently at 3,033 so long, of course, as price does not drop below that low before the close of the monthly bar.

See how that works?  It is important to understand that.

Take a look at the small green up arrow on the monthly bar chart above from way back in April of 2009 at 659.25.  That was the most aggressive possible BUY signal for bears to cover and REVERSE their trading bias to long.  That HUGE signal happened just one month after the 2009 bottom was set.

When this bull market eventually ends, you will see the mirror image opposite SELL signal form when the bullish series of higher lows is taken out by a move BELOW the last months higher low that DOES NOT recover back above.  That is unlikely to happen this month barring an extraordinary sell-off, but starting in December, keep a close eye on the previous bar’s low if we start to get a significant sell-off that cascades through short-term and intermediate stop/reverse lines.

If you didn’t get that, please reread it again until you understand–because that is the whole ballgame right there if you want to protect your precious trading capital once the market rug eventually gets yanked.

Pro tip:  Be very mindful of who just entered the Presidential race on the democrat side and the immense power his company wields over these markets.  The democrats think the only way they can beat Trump is if the economy tanks, so (in my opinion) beware!

Long-term investors can use the techniques I pointed out here on all of your stocks in your portfolio.  Stops and Targets will tell you exactly what to do when the time comes, but you will have to be mentally prepared to exit when you see the pattern confirmed.

The pros will do everything they can to gap and trap the bulls when the reversal time eventually comes.  It will probably take every fiber of our being to fight our instincts and to ignore the news and noise propaganda when the reversal eventually starts.  Trust me on this.

We have had a great ride on this bull market since 2009, but now could be a good time to start becoming extra cautious (in my opinion).

 

 

 

Next, let’s move in to the weekly bars to assess the intermediate timeframe…

Using the same pivot analysis technique, take note of the 4-bar (monthly) pivots highlighted above.  What we are primarily interested in, at present, are the recent sequence of higher pivot lows.  The last one occurred at 2,855 and so that now becomes the hard deck for the amazing Weekly Bar Paradigm that I have been pointing out here for the past nearly 10 years.  The pros have been periodically using those 4-bar higher lows as stop-raiding targets since the 2009 low–and I have now pointed out 10 previous instances where they took out the stops underneath and then reversed and rallied afterwards.  All of those instances were ideal pullback entries to ride the bull market.

If we were to see another sell-off start, the obvious downside target for the Weekly Bar Paradigm will be the stops under the last higher weekly 4-bar pivot low.  Currently, that would be under 2,855.

As I have been saying for years… “We will know with absolute certainty when the Weekly Bar Paradigm has ended when we see a break below a previous weekly higher 4-bar pivot low that DOES NOT recover back above that pivot”.  Once that last higher low stop sweep/reversal pattern is eventually broken, then we could start to see a new lower high pattern begin during an inevitable cyclical bear market phase.

Note that we haven’t had a lower high on the weekly bars for nine consecutive weeks!  This market could be very extended here, so again, keep a close eye on the last weekly bar’s low (see Stops and Targets intermediate range envelope) for the first sign of a sell-off, if one comes.

 

 

 

And lastly, let’s zoom into the daily bar/range chart above to see all three timeframes superimposed…

As I stated at the top of this post, and Stops and Targets agrees… it is as bullish as it can get right here.  It’s all good above the short-term stop/reverse line, which is currently set at the 3,116.50 previous daily bar low–since that timeframe is trending (moving the stop/reverse line higher with each consecutive higher low).  First sign of potential trouble would be a break under the short-term stop/reverse line on a daily bar CLOSE followed by a sequence of lower highs on the daily bars that would eventually move the stop/reverse line lower.

The intermediate range has tightened but the long-term range is still lagging after the recent upside breakout.  When the November bar closes, it too will tighten and show a bullish trending pattern if prices remain above the current long-term stop/reverse line at 2,957.25 through the end of this month.

It’s all good for the bulls until it ain’t… and the paragraphs above should help to point out exactly where that would start to occur if/when things start to change.

…my .02

 

 

 

 

 

 

 

 

 

 

 

Market Update

To my eye this market has been stuck in a rut and doing nothing terribly interesting nor particularly noteworthy for several months.  Today, as we finally get an upside breakout in the big range, I thought it might be fun to take a look at the Big Picture via the three major timeframes and to maybe toss out another rant about what I think has been causing this multi-month compression and malaise.

 

First, the rant…

<rant/>

Longtime readers here know that I am an early supporter and big fan of the President.  This guy stepped away from the ultimate billionaire lifestyle to take a thankless and extremely difficult job for NO PAY! …and never in the history of this Republic has anyone been more abused and mistreated than him.  Yet, each day he gets up and continues to try to make this a better country by making pro-American policy decisions and striking deals that truly improve the lives of average Americans.

It should be clear to most by now that the our government, the dinosaur media, and the entertainment industry have all been thoroughly compromised by anti-American entities.  One doesn’t have to venture far to connect the dots and end up staring straight at the Communist Chinese as the likely top-level protagonists.

In a quote often attributed to Joseph Stalin “When it comes time to hang the capitalists, they will vie with each other for the rope contract.”  So true! …and that is the path we have been on for several decades!  However, along comes an amazing man who has bravely confronted the massive scheme to sell out the country–and he threatens to not only cut off the cash flow for bribes  (largely by initiating a brilliant tariff strategy that the woefully corrupt US Congress cannot touch) but also threatens to expose the very network of traitors who have been selling out America.

The Globalist Socialists, who are all motivated by money at their sinister greedy cores, have been parasitically feeding off of the United States for decades.  Their plan was to drain the host of life completely and then swoop in with their glorious (for them and certainly NOT for us) ‘New World Order’ that Bush the Elder started to usher in during his installment after the last ‘accidental President’ and outsider, Ronald Reagan.  They successfully installed an uninterrupted succession of stooges and all was going exactly to plan until Donald Trump stepped in and beat the most hatable candidate the NWO could possibly put forward.  It was her hubris, arrogance, and incessant bullying that enabled Trump to be miraculously elected against a completely stacked deck.

The election of 2016 has sent shock waves through the evil empire and they have spared no effort in activating (and ultimately exposing) their bought and paid for agents and assets.  So many ‘conservative’ pundits and politicians have had the mask ripped right off of them as their masters demand that they stop Trump.  NONE of it is working.  President Trump continues to out maneuver and out-smart them.  The most recent example is the middle-east strategy that has extracted US troops, killed the top ISIS threats, taken the oil, and left the Russians holding the bag standing between ancient and never-ending Sunni/Shia warfare stupidity.  For example, how ridiculous do those concerned and outraged ‘Republican’ critics from last week look now after President Trump pulled off his latest brilliant maneuver?

The globalists have a real conundrum when it comes to dealing with President Trump.  They have assumed control of many if not most multi-national corporations often via lax mergers and acquisitions accommodated by corrupt public officials.  The wildly successful tariff implementations by President Trump have totally reversed their plan of siphoning wealth away from the US into a global rush to invest back into the US.  These corporations are in essence trapped into repatriating capital investment back into the US and away from China predominantly.  The more China bleeds jobs and precious hard capital, the less able they are to buy influence around the world…and also, the more hostile average Chinese citizens will become toward the current communist regime as living conditions deteriorate and prospects diminish.

As China and other hostile economies contract they are forced to weaken their currency in an attempt to offset the tariff cost to stay competitive in trade volume.  In essence, Trump has brilliantly exported inflation to the enemy economies and America is adeptly side-stepping what ‘leading economists’ said would be rampant price inflation as those import tariffs are enacted.  To the chagrin of his enemies, his tariff policies are proving to be wildly successful, and to put it bluntly, America’s primary nemesis, China, is totally screwed.

Ironically, the global socialists would love nothing more than to crash the American economy to weaken Trump’s support, which is his number one triumph–but they can’t!  There is currently no other place for capital to flow to seek a better return, so try as they might–they just can’t make this incredible economy sink without simultaneously hurting themselves.

It is my opinion that the sideways action we have seen for the past many months has been a mass paralysis by major market participants as everyone waits to see if any of the various ridiculous charades employed by an increasingly desperate opposition will stick.  This could be a race by them to try to remove president Trump (by any means possible) before the good guys regain control of the DOJ, FBI and CIA and the heinous acts of selling out America are exposed.  The ones screaming the loudest against Trump are likely the ones with the most to lose when the facts eventually come out about the massive plot to take down America.

As I said in a post here long ago when I predicted Trump would be elected President shortly after he declared his candidacy… this administration was never going to be dull, and the immense drama has certainly not disappointed thus far!

One last thought here… I was talking to a friend yesterday who was disturbed about the ridiculous tenor and hysteria of the ‘news and noise’ and I remembered something that a historian told me at Colonial Williamsburg many years ago… He said that over time things really haven’t changed all that much and never really do.  At the time of the American Revolution, for example, the public opinion was about 40% loyalists and 40% rebels (or patriots depending on your perspective).  That left 20% undecided.

Today, I think things are about the same.  There are 40% on one side and 40% on the other whose opinions and positions are fixed and absolutely unchangeable.  What is left are the incredibly insipid dolts ‘in the middle‘.  The battle we see playing out now in the media is not intended for the 80% who have already decided their loyalties–but rather, this is an all-out attempt to sway the 20% and if possible, to discourage turnout from the ‘wrong (in their opinion)’ 40%.  So relax, sit back and enjoy the show.  It’s all pretty darned entertaining when viewed from the proper perspective.  Just be sure to show up and vote when the time comes!

It is going to absolutely kill the Trump haters to see the new all-time highs in the market today on the news.  The globalists hate it too because it further strengthens the power of their nemesis, but ultimately they love money more than ideology and President Trump is in the process of bringing them back around to the right side with the proper carrot.  As a businessman and self-made billionaire, he truly understands how this works.  Donald Trump has always given prior enemies every opportunity to switch sides, but if they still persist–>then more often than not they will end up a bit like the ISIS dude in the tunnel in Syria last weekend… ripped to shreds and self-immolated by his own hand!  It’s really a thing of brilliance to behold, and the world has never seen anything quite like it.

</rant>

 

Okay, with my cathartic rant out of the way let’s take a quick peek at the ‘Big Picture’ market structure…

 

From Stops and Targets, we can see that the S&P 500 Futures have broken out to a new all-time high.

Take a peek at how close together and compressed those three stop/reverse lines are!  That is the result of months of sideways price action.

It would take very little to crash right back down through all of those to flip all three trend bearish–so keep a very wary eye on Top Spotters in case we get a run of the bear stops above the old range high  and then a hard reversal back down.  If something interesting happens, I’ll be sure to point it out here.

At any rate, it’s all good for bulls above those stop/reverse lines–> but potentially very serious if we get a stop sweep/reversal back down with massive numbers of spotter signals for confirmation.

It has been a great run from the last confirmed Bottom Spotter after last Christmas.  The broad market is up > 30% since!

 

 

 

 

The chart above uses monthly bars to illustrate the long-term timeframe.  Note the bounce from the VLT (very long-term) trendline back at Christmas.  That initial rally run stalled in May (sell in May and go away) and price has criss-crossed that high multiple times since.  Note that the game has been alternate stop-running in almost every month since.  It has been a brutal time for trend followers–but an absolutely great time for range traders.  The great news about S&T is that the counter-trend range envelope signals have been absolutely spot-on.

 

 

The chart above uses weekly bars to illustrate the intermediate time frame.

Note here that the weekly paradigm hard deck is presently located at 2,777.50.  The major bullish paradigm that has been in play since the 2009 bottom remains intact above that line.

If price continues to trade above 2,855 through the remainder of this week, the trailing stop hard deck line will move up to that level to lock in more gains on that trade.

 

 

 

The daily bar/range chart above adds the short-term timeframe, but also shows intermediate and long-term levels.

The major number in play right now is the all-time high breakout line at 3031.25!  A move back below that line would generate a counter-trend sell signal in all three timeframes–so that’s a biggie right now.  Counter-trend signals work great in a trading range–but if the market starts to trend again in the long term then the range traders will get run over, so be wary.

…my .02