Market Update

 

“The stock market does not move…it IS moved.”  

The Globex overnight futures market, coming out of the weekend break, was driven down nearly 500 Dow points overnight, equating to approximately -50 ES (S&P 500 Futures Option) points.  Clearly the pros have something in mind here on an opening offensive and one could speculate that this is one more element of a coordinated full-broadside salvo being fired in the general direction of President Trump by his many enemies on the Global Socialist Left.

Regarding the ridiculous impeachment fiasco and associated engineered theatrics yet to come, I am somehow reminded here of the famous quote attributed to an unknown American soldier in reference to the Nazi’s during the Battle of The Bulge in World War II…

“They’ve got us surrounded again, the poor bastards.” 

Not one dirty leftist trick that they have thrown at this amazing President has scored a hit, and this current silliness won’t either. everyone KNOWS that there is zero chance for removal by the Senate, so what we are seeing is nothing but political theater.

Most people are worn out and tired of the antics.  But, as usual, the left wrongly assumes that everyone else outside of their three echo chambers concentrated in the Liberal media bastions of New York, LA, and of course in Capital City where the parasitic federal government grifters slither about, gives half a crap.  We honestly don’t.  Check out the plummeting TV ratings for affirmation.

Many savvy traders also assume that an election year market takedown attempt was eventually coming.  The cornerstone of President Trump’s agenda has been his amazing economic success.  The left desperately wants to take that issue away from him, so any damaging tactic to that legacy is something that has been widely suspected and anticipated.  That may very well be the reason why market speculative activity has dried up recently.  So, today was the day to shake things up a bit.

I suspected the opening salvo would kick off as an overnight move and would likely come over a weekend or after a holiday break.  The pros had to first distribute and reposition ahead of the move, and that takes extra time in a market full of skeptical and extremely wary traders.

As is often the case, the pros do whatever they can to shake off the early bears and keep them from having the same wiggle room on their stops as the pros enjoy from a tip-top premeditated entry.  Bears who chase a move into the hole are exposed and vulnerable to a rally.  Those sellers become ready buyers and that is what the pros will need to sell back into when the time comes.  So, the likelihood of a rally is directly proportional to the numbers of new exposed short positions put on.  Bears should always welcome solemnity and be very wary when it seems there are plenty others who agree with them.

Now that the pros have sprung a ‘gap and trap’ ploy, let’s take a look at the likely road ahead using the S&P 500 Futures Options

 

 

 

The market from a long-term bullish perspective remains bullish above the previous monthly bar low, which is currently located at 3072.25.  Once the present month closes, that long-term range bottom will move up to the current monthly bar low, which is at 3181 (assuming that low holds through the January 31 close).

There is a long-term range envelope counter-trend sell signal in play at Stops and Targets today at 3254.  A close below that line may generate some additional selling near the end of the trading session as disciplined traders would begin to exit partial positions to take profits on a great run up since the last major buy signal way down at 2330.75

From a long-term perspective, this is an expected pullback that will not generate any real panic selling until/unless price breaks below 3181 and then 3072.25.  Those then, are key targets to consider if a push lower were to develop.

 

 

 

Moving in to the intermediate timeframe and using weekly bars for analysis (see chart above), we can see that a break below the previous week’s low at 3280.50 was accomplished with the current session’s opening gap.  So long as price holds below that line it is sort of analogous to having one’s head held underwater… the one doing the holding won’t let you up until the last bubbles stop coming out.  The pros are probably going to do that here.  Their goal is to chase bulls out of stocks they wish to eventually accumulate, at prices which are a bargain, and to simultaneously lure bears in with borrowed shares that must be repurchased.

The surface of the water where the bull’s head is being held beneath is 3280.50.  This is the ‘bubbles escaping phase’ and the ‘bubbles’ in my analogy would be shares being sold.  When that selling slows to a trickle, then the pros will switch sides and go after the bears.  The line where bears start to be held under water as their bubbles escape (represented by buying to cover) would be above the very same line at 3280.50.  Remember, every time the pros sell a put they open a call for themselves knowing those shares will have to be bought back eventually.  It’s a great game for those market makers, of course.  When Al Capone was explained how the market makers operated he is reported to have commented in an exasperated voice… “I am in the wrong racket!”

 

Weekly Bar Paradigm Update

In a very well-established paradigm that has been in play since the 2009 bottom, the pros have been consistently working in the intermediate timeframe.  I have explained it many times here so I won’t go into the details again, but for those who have been playing along in what amounts to shooting fish in a barrel, the current line that must be exceeded to the downside to establish a new higher 4-bar weekly low is at 3181.  Once we see a weekly paradigm strength pullback move develop, that line would be the downside target.

Note that we have not had a pullback to a higher weekly 4-bar pivot low since October of last year and that low way down there at 2857.75 is the current paradigm hard deck.  Do you see what I mean about a tradable pullback being long overdue?

 

If this futures push gets going lower, the media will absolutely howl that the end is near, as they always do–but the truth of the matter is that this market has been relentlessly pushing higher and at some point, corrections happen.  Again, they will do what they can to egg a decline on–but nobody listens to them anymore.

So, Cliff’s note version for the all-important intermediate timeframe is bulls are underwater and bears are prowling below 3280.50–but a move back above signals a switch of momentum.

A renewed move lower likely would initially target 3181 in order to accomplish the minimum criteria for a new higher 4-bar pivot low on the weekly chart (see green dots at previous pivot lows where they touch the dashed range bottom line on the weekly chart above).

Otherwise, since we really don’t have any significant Top Spotter mass confirmations–my guess for now is a simple correction here and not the ‘end of the world’, as the mediots would no doubt breathlessly declare (to increasingly shrinking audiences) at every opportunity.

 

 

 

 

On the daily bar/range chart above you can see that the futures takedown bounced off the support trendline drawn from 10-day lows.  Remember, the bulls are currently having their heads held underwater here below 3280.50.  Bears are being dared to ‘short into the hole’ and the pros, of course, are just watching the bubbles to see what their bull victims do before proceeding to the next move.

A break under the support trendline would enter a void down to the next level of bull stops resting under the last pullback at 3181.  Note that there is an open gap at 3175.25 –and that is exactly where I would go if I were them –> should additional downside be the plan.

So, that’s the lay of the land technically as we watch to see what additional silliness the pros have in store for us as the engineered impeachment debacle and associated side shows continue to unfold.  Remember, we all already KNOW President Trump won’t be removed because there is simply no way that they possibly get a 2/3 rds majority of senators to convict.  This whole ploy has nothing to do with actually removing President Trump but rather is a very thinly veiled attempt to circumvent the Constitution and short of that to damage President Trump and attempt to influence the upcoming election using taxpayer funds.  It’s simply not gonna happen folks.  The Global Socialist Left will whiff yet again.  It’s been a v-e-r-y bad three years for those effete scumbags.  🙂

…my .02

 

 

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