The Debate

Last night was the first US presidential debate.  I have had many private requests to give my own personal take on the election, so here it is…and what I write in my rant below may surprise some of you who know that I have been riding the bullish wave from the bottom since 2009.

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<rant/>

Last night the globalists needed their puppet to deliver a knockout blow to the nationalist.

Not sure that the string-holders are too terribly happy about her performance based upon what I observed.  The globalists control the media with an iron grip and last night that state-controlled media might have been just a little too transparent in spoon-feeding attack vectors.  Clinton’s answers were obviously memorized and robotic…clearly not what one would expect from someone who did NOT have an advance warning of what questions were coming.  Trump, on the other hand, was a guy clearly under attack with the deck stacked against him and was forced to think on his feet to avoid the many very well-considered snares that were sprung.  In the end, he didn’t make any major tactical mistakes and sidestepped the traps, and so the media enablers and Clinton failed in their attempt to find a key gotcha moment to demonize Trump.  Paradoxically, they just allowed him to demonstrate precisely the sort of restrained executive skills that a leader should have in a time of crisis.

In my opinion, most voters have already made up their mind who they are going to vote for.  The few left out there who are ‘undecided’ probably didn’t find much substance to draw them toward Clinton–and there also wasn’t much to push them away from Trump.  We have to keep in mind, however, that according to a NPR survey approximately a quarter of Americans think that the sun orbits the earth.  There are some really clueless folks walking around out there and their vote counts just the same as yours.  At this point, the candidates are playing to that segment of the populace–not to their respective base who are entrenched.  Did Clinton do anything to fire up those notoriously lazy creatures to head for the polls?  Probably not.  Is Trump’s base fired up and itching to vote?  Have you seen the pictures of the huge crowds at his rallies and compared them to the embarrassing photos of Clinton’s paltry turnout?  There is your unbiased poll.

So, really, the big losers last night were likely the globalists.  They have hitched their wagon to a perhaps the most unlikable candidate to ever run for public office.  Honestly, it almost seems to me like they want to lose with the horrible optics put forth in this election thus far.

I am personally fascinated by this election and usually I couldn’t care less…because to me there is no discernible difference between a Bush and a Clinton, for example.  I loathe both organized crime families equally for their moral weakness and for their treasonous actions toward this great nation in the interest of their trans-national financial backers and of course, to line their own selfish pockets with blood money.

My own personal selection for the best available candidate in a presidential primary has not made it to the finals since Reagan did in 1980 and that’s why I find this election so interesting.  Something very different is going on this time.  For the first time in nearly 40 years, the status quo is actually being threatened.  Could we be on the verge of a massive cyclical change like the one that ushered in the Reagan years?  Does Obama = Carter (the two worst presidents in US history) and Trump = Reagan (both media-savvy outsiders who were underestimated by the global elites)?  Oh boy, I sure do hope so…because the Reagan years were pretty darned fun (and profitable) for those of us who lived through them.

Now, the two things not considered ‘polite’ conversation are religion and politics.  I get that and realize that my inbox is probably going to get a few jabs from this rant–but in the end, what I personally care about is freedom and economic opportunity for my children and for their children.  One of the current candidates wants to tax the hell out of me and to enact ever more imperious federal edicts that will crush any hope of true economic growth and future prosperity.  The other one want to cut my taxes and to get the nanny-state government out of the way to let capitalism do it’s thing.

That’s a pretty easy choice for me.

</rant>

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The following charts sum up what this election is really about to thinking voters.  Do we really want four more years of this…

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…my .02

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ES Update

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Today the 2-day FOMC meeting convenes.  The grand proclamation comes tomorrow at 2:30 pm with the added sideshow attractions of FOMC quarterly forecasts and a Fed Chair press conference.

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Let’s take a peek at the current technical setup by timeframes starting with monthly bars and zooming all the way in to hourly…

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The very long-term trend is illustrated (by me) using monthly bars.  I have explained in prior posts the best case ‘wave 5’ projection of 2525.50 for the current bullish macro trend that started at the bear market bottom of 473.75 and was confirmed on the breakout of the old secular bear market downtrend (long red trendline on the chart above).

The current monthly bar is bearish under last month’s close of 2163.  The next VLT downside target, if the current pullback lows don’t hold, would be the last bearish trendline breakout (see the short red trendline above) which is at the 2063 area.

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Moving in to examine the long-term trend, illustrated using weekly bars, we can see the 4-bar pivot strategy that the pros have been using since 2009 to steadily march the market higher using the immense leverage of index futures arbitrage.  The most recent higher pivot low was set at ES1975.  That is the current trailing stop and absolute hard deck of the current paradigm that has been in play since 2009.  It’s all good for long-term bulls so long as any deep pullback stays above that very important line.  But, if we get a break under the last weekly 4 bar pivot low that is not immediately reversed–and then price is unable to recover back above above that line on subsequent rallies–then this bull market paradigm will be officially finished.

I will let you know if/when that happens right here on this blog–but Stops and Targets will be ahead of my analysis on both trending and counter-trending signals.  So, pay very careful attention to the primary trend lines on Stops and Targets.

Note that the current pullback hook (which has happened after every previous stop sweep/reversal buy signal) went low enough at 2100.25 to easily set up the left side minimums of a 4-bar pivot.  That is why I pointed out in my last post to use that line as a bull/bear line.  For that line at 2100.25 to eventually morph into the next higher 4-bar pivot low in the sequence (and to advance the hard deck trailing stop from the current line at 1975) we will need to see four consecutive weeks of trading above that line at 2100.25.  We have a long way to go from here, but I just want you to understand the current significance of that number.  If we get another leg lower that takes out 2100.25 then the time/cycle clock will restart.

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Moving in to the daily bar/range chart –we can see the short-term bearish channel (marked as dashed red parallel lines on the chart above), which defines the present short-term downtrend.    The pros might try to push price back to the top rail of the channel tomorrow before the announcement at 2:30 PM.  As I type, that descending top rail is presently in the 2152 area.  With current price near 2134 it might be a bit of a stretch to get there, but we’ll see.  If price breaks above the top rail of that channel and holds then the ST downtrend would likely be finished and 2100.25 would start looking a bit more likely as a potential higher intermediate low.  Otherwise, with a renewed push down the next lower target would be the bottom rail of that descending channel.

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Lastly, the chart above shows hourly bars to precisely define the ST (short term) and VST (very short term) support and resistance levels/targets for help fine tune strategy.  Resistance above is in a band between 2148.25 to 2161.25 and the support band below is between 2098.25 to 2113

…my .02

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ES Update

In my last post I wrote:

…as we watch to see if the pros will eventually build a pullback hook down to build a higher 4 bar pivot low.  That has happened after each previous occurrence of a stop sweep/reversal so that’s what I am expecting next.

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…and like clockwork, et voila!

After every stop sweep/reversal buy signal since 2009 we have seen a hook down to a higher 4-bar pivot low that typically lasts from 2-4 weeks from the preceding high.  I have circled each of them on the weekly bar ‘roadmap’ chart above.  We are currently on week 3 since the last ES 2185 high.

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Let’s move in to the daily bar / range chart for some forensic analysis of what the pros just did…

Back on June 24th the pros head-faked the bulls and shook out the bears before diving the market down to set up the major stop sweep/reversal at 2006.75.  It has been my working hypothesis that a large number of bearish speculators chased that trade and entered short between 2089.75 and the major low (and now the paradigm hard deck) at 1975.  I pointed out that whole move in real-time right here.  It was easily predictable once you understand the patterns that the pros have been using since 2009.

The pros, once they had sufficient sellers on the other side of their trades, launched hard off of that 1975 bottom and squeezed the bears for all they had.  In fact, that was one of the most brutal sideways up squeezes I have seen in quite a while.  Once the previous highest close of 2012.50 (marked by dotted gold line on chart above) was cleared to the upside the pros spent >40 days in a sideways/up distribution as they waited for the major September/December options rollover day!  Once rollover was complete and the bears were looted–the pros yanked the rug and in one fell swoop they took out 43 days worth of bull stops!

Now, it’s no accident that the pros drove it straight down to the original breakout line at 2102.50 before a bounce this morning right there.  That is the point of diminishing returns for them–though it remains to be seen if they will take it down another notch here.

In my last post I also pointed out the following sell markers:

Note the bottom of the light green dashed channel on the chart above.  That is the intermediate term bullish trident channel and the first sell signal for more sophisticated traders would be a break under that rising bottom rail (currently at the 2160 area).  A bounce there, conversely, is a buy signal.  A second sell trigger would come on a move under the VST range bottom at 2148.25

On the chart above you can see the red sell line at 2160, so this is an intermediate-level event (since the IT bullish trident channel bottom rail was broken).  With the post-rollover smackdown the pros now have sufficient depth on the sell-off to easily create a higher low in the intermediate timeframe anywhere above 1975

For today, let’s use 2102.50 as an intraday bull/bear line for reasons explained above and see how it goes.

…my .02

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Option Rollover Day

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Volume shifts from the September 2016 to December 2016 futures option contracts today with a difference of –6.5 points from ESU16 (September) to ESZ16 (December).

All previous chart numbers have been adjusted to reflect the new contract pricing—so, for example, the short-term primary trend line from the expiring September contract at 2165.50 now becomes 2159, and so forth.

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Let’s take a look at the revised timeframe charts starting from monthly and zooming in to daily…

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My mirroring projection (using time/price from low to VLT trendline breakout) worked out wonderfully at predicting the top of ‘wave 3’, so assuming that the pros are sticking with an Elliot Wave model for engineering the market higher I have now added a projection for the top of what would be the equivalent of ‘wave 5’ using the common EW practice of mirroring ‘wave 1’ in time and price.

The begin/end points for the waves so far are:

1) 473.75 to 1221.50
2) 1221.50 to 927.25
3) 927.25 to 2084.50
4) 2084.50 to 1777.75
5) 1777.75 to 2525.50 (projected)

I am not a big fan of Elliot Wave Theory, but we are looking for clues as to what the pros are doing in this all too predictable annual redeployment of the original ARRA stimulus (due to a lack of an actual US budget and the silliness of baseline budgeting that I have explained in previous posts).

For those who want a quick primer on Elliot Wave basics, here is a link with more information:

http://stockcharts.com/school/doku.php?id=chart_school:market_analysis:elliott_wave_theory

There is of course, no guarantee that price can/will get to the wave 5 projection target above–but if we see more acceleration to the upside then at least we have a rough VLT target in mind and this image can help to keep bears honest who otherwise might be tempted to guess at tops in this carefully engineered bull market.

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Moving in to the weekly bars… the chart above is the roadmap that has nailed every major entry in the market since the secular bear market bottom in 2009.  I have said it many times before but will repeat it again here.  The pros are engineering the market higher using 4 bar pivots on the weekly bars.  There have been only 8 instances since 2009 (all numbered on the chart above) where price has dipped below a previous 4 bar weekly pivot low.  In 6 out of 8 instances that was a perfect stop/sweep reversal buy signal.  The only two exceptions were at what would become waves 2 and 4 (marked with yellow highlights on the chart above), so you can see that between the weekly and monthly bar charts I am demonstrating a perfect roadmap for the ongoing strategy of the pros.

Now, here is the important caveat that you MUST remember when following the charts above… the current paradigm will only end when we see a break below the last 4 bar pivot low that is NOT immediately reversed.

The last 4-bar pivot low was at 1975 (point 8 on the chart above).  Until/unless that number is broken to the downside and price does not recover above–the current paradigm remains valid and in play.  To let that sink in–realize that a buy at every single green green dot (4-bar pivot lows) since 2009 is currently profitable.  Every last one of them.

Q:  What defines a bull market?
A:  A series of higher highs and higher lows.

The first task of switching classification from a bull to a bear is to break the sequence of higher lows–and to replace with a sequence of lower highs.

So, the hard deck for long-term bears is currently 1975 as we watch to see if the pros will eventually build a pullback hook down to build a higher 4 bar pivot low.  That has happened after each previous occurrence of a stop sweep/reversal so that’s what I am expecting next–but while that hook down might be tradable, it probably won’t be the end of the bull–unless we were to get a break of 1975.

In a perfect world, we will get a unanimous set of index/futures spotter signals that will be supported by a massive number of internal spotters on the Russell 3000 when a tradable top comes.  I will point that out here if/when that happens.

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The last chart for today is the daily bar/range chart shown above.  This market has been insanely boring since the breakout to new highs in mid-July.  It has just been trading sideways with little pops to the upside which is the hallmark of a bear squeeze when the pros have large numbers of folks trapped in losing trades.  My guess is that plenty of people bit on the June 24th selloff down to the last stop sweep/reversal entry (pointed out here in real-time).  Today is rollover to the December contract so maybe we will start to se some volatility come back into the market soon.

Note the bottom of the light green dashed channel on the chart above.  That is the intermediate term bullish trident channel and the first sell signal for more sophisticated traders would be a break under that rising bottom rail (currently at the 2160 area).  A bounce there, conversely, is a buy signal.  A second sell trigger would come on a move under the VST range bottom at 2148.25.  ES needs another day after today of trading above that line to set a new ST range bottom.

So, that’s the lay of the land as we await a release from the volatility-freezing tractor beam that has been boring us all for months.

…my .02

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*If you would like to be notified immediately when a new post is added here, be sure to enter your email address in the box at the top right of this page.  All email addresses are kept strictly confidential and used solely for the purpose of notifying readers of this blog.

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