Last night I posted about huge numbers of Bottom Spotters that were generated yesterday at the close. There were 921 NEW Bottom Spotters generated along with unanimous Bottom Spotters across the major Indices (Dow Industrials, S&P 500, NASDAQ Composite, Russell 3000) at major Futures Options (ES, YM, NQ). In my opinion–what happened yesterday is the Holy Grail of signals generated by www.stopsandtargets.com. It can take YEARS for the stars to align in this way. This is a very rare and very special occurrence.
First things first, of course, and that means that we actually must receive CONFIRMATION for those signals to become official. The confirmation for each individual stock and for all of the indices and futures with active Bottom Spotter alerts is a closing price that crosses above the short-term Stop/Reverse line for each.
The other side of the possibilities from here would be a massive Bottom Spotter failure. That does happen from time to time, so we have to be diligent as this unfolds. A failure is defined as a a price movement down that dips below the Bottom Spotter alert price (yesterday’s low for all of those new alerts). If we get a failure to launch here, then everything I am saying about this bounce setup goes right out the window instantly if/when those Bottom Spotter hard deck prices get broken.
To be very clear–a failure/invalidation of a Bottom Spotter signal can be a very bad thing for a speculator trying to time a major reversal if that person does not exit at the very first sign of signal failure! A Bottom Spotter failure is a trend continuation SELL signal and can be accompanied by massive selling as bull protective sell stops are triggered along with new bear entires selling short on a momentum breakout to create enormous selling volume. Hopefully, I have been very clear about that–if this stop sweep/reversal setup works out then we have a potentially great buying opportunity–but if this setup fails, you really don’t want to hesitate and then run to potentially huge losses on any new speculative position if the bullish buy the dip paradigm ends and a potential new secular bear market begins. Let that sentence sink in fully! Okay, rant off.
Let’s take a closer look at where we currently stand on the Weekly Bar Paradigm…
(click image to enlarge)
The chart above shows weekly bars for the S&P 500 Futures contract. Each candlestick bar represents one week (5 trading days).
What we are extremely interested to watch on the weekly bars is the formation of 4-bar weekly pivots. What that means is a low or high price reversal that is at the extreme high or low relative to the preceding and proceeding 4 weeks on either side. I have marked those pivots with dark green dots at the pivot lows and red dots at the pivot highs. Don’t be confused by the red and bright green dots that are centered on the Stop/Reverse line. Those are weekly TREND BUY and SELL signals, as reflected at Stops and Targets. Note: The last weekly trend sell (see intermediate tab at Stops and Targets) was at 3328 on February 24th.
What we are interested to look at in this post in particular are the 4-bar pivot lows (marked by the dark green dots). In a trending secular bull market we expect to see a pattern of higher highs and higher lows as the market naturally works higher. Usually, as the market marches higher the previous higher low is not tested. As a result, professional investors use those pivot lows to trail profit stops for long-term positions. That is important to understand–so take a very close look at the chart above to see how that pattern works.
It doesn’t happen very often (just 11 times now since the 2009 market low), but every now and again the pros will take the market down intentionally with massive counter-trend short trades. Their target has consistently been those huge troves of professional stops resting underneath the weekly bar pivot lows. The reason the pros go there is because they KNOW where those guaranteed sellers are. The pros need to know that when it comes time to cover their short trades (by buying to cover) that there will be a sufficient number of SELLERS at a particular price point. The pros need a large volume of sellers because they not only have to buy to cover their own positions without driving the market against their positions–but they also need a place to BUY at bargain prices to reestablish their own positions ahead of the intended reversal. Once they are covered and ready to go, the pros will buy furiously and pull their usual dirty tricks like pulling bids on the way up and freezing out bears with opening gaps, etc. For anyone who has been on the wrong side of a reversal trap–you know exactly what I am talking about. The pros WANT to induce panic at their exits and reentries, that’s how they make this work. Wash, rinse, repeat. The game always stays the same. Pointing out those levels is how Stops and Targets works. Does that all make sense? If not, please reread the above paragraph because that is the nugget of wisdom that is essential to prosper in the markets ever since Futures Options started to be used as the tail that wags the dog in the late 1990’s.
So, with all of that said–let’s take a close look at the current setup on the weekly chart above…
I have circled the last higher 4-bar pivot low at 2857.75 and as you will recall from previous posts–I pointed that out as a VERY IMPORTANT NUMBER. Now do you see why?
From the top, the pros intentionally took this market down. Their premeditated targets lower were the last three 4-bar pivot lows at 2857.75, 2780.25, and 2737.25 respectively. Why, you might ask? …because that is where they KNEW they would find sellers, because that is where the trailing stops were resting. Those are known pressure points. All the pros had to do was puncture each one and just like shaking a piggy bank–the stocks came tumbling out as investors either exited on disciplined trades or panicked as the pain became too great. The Fake Media was all too happy to supply the fear mongering necessary to whip the unaware masses into a frenzy. Come on folks, the Corona Virus is just a strain of the common flu. We’ve seen this many times before. Anybody remember SARS, Bird Flu, and all the other previous scare tactics from the propagandists? Go ahead think back to previous market scares and remember all the ridiculous stuff the media used to position people mentally for the pros to rob. It is ALL coordinated. Every last bit of it. I have been ranting against the ‘news and noise’ here for decades. They are vile creatures. No different than Pravda from the USSR days–except they are owned and controlled by the pros with the sole purpose of making money.
Do you see it now? The whole thing is just a choreographed play. Once you understand how these people operate, then you can start to see the strings they pull to manipulate the market. It is about the stops, and always has been. Once you understand how they think then things become much clearer. Hopefully I have enlightened someone with this post.
The older I get the more I realize that what matters most in life is loving other people. Your family, your friends–that is the key. The media propagandists WANT to toy with your emotions–because they are trying to maneuver you into a kill zone in the market. If you don’t realize that, then it is easy to become miserable. Laugh at those evil folks and enjoy the show from here on, is my advice. The markets present great opportunities to make money–but the pros are always going to do their level best to maneuver folks to the OTHER SIDE of their trades. So, watch for the signs of manipulation and when it starts then ask yourself what are they up to and look to see where are they going? They have NO desire to kill their golden calf, so when they have finished shaking the trees and stuffing their pockets with bargains then the market will reverse. It is simply too easy for them to stop any crash by just buying the overnight futures. That’s all they have to do and that is why I KNOW they were taking this market down intentionally. Watch what happens when they all get on the other side!
Okay, so back to the chart setup above…
Look at the parallel channel marked by the dashed green lines. Do you see where buyers came in there to set the lows yesterday? That is the hard deck for this setup. If, for some reason, this Bottom Spotter setup is invalidated then we can already see the next targets lower. Those are the trend lines drawn off previous higher 4-bar weekly pivot lows. Pretty cool, right?
You know what to do. Once the pros decide the time is right, this ‘panic’ will reverse with a vengeance. If price goes below then Bottom Spotter hard deck, then this particular setup is finished and we’ll start looking for the next one–otherwise, if we get a buying frenzy and short-term Stop/Reverse lines are eventually crossed to the upside then suddenly the Fake News will start singing a brand new tune. Watch for it, it’s kinda entertaining once you know what to look for.
To complete engineered stop sweep/reversal number 11 in the Weekly Bar Paradigm, we would need to see prices eventually recover and then hold ABOVE that line. If it does, then this was just another orchestrated event. If not, then we’ll have something new to discuss if/when the amazing paradigm that has been in place since 2009 finally ends.
PS: Feel free to circulate links to this post to others that you think might be helped. You all have my permission to do so.