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