Indice S&P 500Mis à jour Bloody August pt.2
So far the expanded flat scenario has played out beautifully. From a larger TF perspective the risk/reward here definitely still favors the sell side. The current "rally" is running out of steam on momentum indicators and we are currently near the 21DEMA (which looks like it's about to death cross the 50DMA) where the 2nd leg of a typically correction begins. We also look to completed an AB=CD on the small bearish gartley shown and a reversal here would basically mean a break of the potential handle of an inverse C&H.
I wouldn't focus too much on the trajectories I've drawn on the chart since it's gonna be tough to tell when wave (iv) is actually over and how much of it is actually wave (v). Instead I'm focusing on 3 plays:
Of course all this rests on the premise that the S&P has no business being above the May highs. While the current leg up looks bogus, the one thing that gives me pause is how crowded the bear trade is at the moment. AAII investor sentiment on thursday polled at 22% which is pretty much near a bottom for recent years. This is why I think without a negative catalyst, predetermining a good entry point for that final leg to 2650 is gonna be tricky business.
If you want to see how a potential bull scenario can play out, take a look at the chart from late 2014 to early 2015. I think the neckline from the march - may lows will be VERY strong support for the upcoming months, which is another reason I think we paint a bear flag above this level (similar to jan '15) and/or need a significant negative catalyst to punch through.
BTW thanks everyone for the positive comments on the first installment of this post. Hopefully the sequel can live up to the original :)
I wouldn't focus too much on the trajectories I've drawn on the chart since it's gonna be tough to tell when wave (iv) is actually over and how much of it is actually wave (v). Instead I'm focusing on 3 plays:
- Shorting from the current area all the way up to 2957 which is the May ATH and taking profit on a retest of the 2750-2800 area. (I'm already vested in this trade, but for those looking to get in might as well for a retest and throwback at ii)
- Scalping the retest to 2875 (particularly enticing if wave ii is choppy, which so far looks to be the case)
- Fading the rip afterwards to 2875 to 2957. While this is probably the trickiest play it will also likely be the most profitable because I think the reversal will be news-driven (hong kong, currency wars, global recession, inverted yield curve) and spike the VIX to higher levels.
Of course all this rests on the premise that the S&P has no business being above the May highs. While the current leg up looks bogus, the one thing that gives me pause is how crowded the bear trade is at the moment. AAII investor sentiment on thursday polled at 22% which is pretty much near a bottom for recent years. This is why I think without a negative catalyst, predetermining a good entry point for that final leg to 2650 is gonna be tricky business.
If you want to see how a potential bull scenario can play out, take a look at the chart from late 2014 to early 2015. I think the neckline from the march - may lows will be VERY strong support for the upcoming months, which is another reason I think we paint a bear flag above this level (similar to jan '15) and/or need a significant negative catalyst to punch through.
BTW thanks everyone for the positive comments on the first installment of this post. Hopefully the sequel can live up to the original :)
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Here's why I believe this median line is such a strong point of resistance. Zoom out and you can see how the median lines of all these schiff pitchforks have acted as strong support throughout this rally. And by inference, once broken, strong support becomes strong resistance. Note
First target 2875 hit right on schedule today... I see no less than 3 different bullish harmonics supporting 2875 (I'm showing a bat here). As long as this level holds I think we see a bounce back up to 2911 to end wave ii where I'll start adding puts again.Note
So we got that bounce from 2875 that I was looking for... unfortunately the bounce was "too good" and breaks the impulse wave as drawn in the chart. I kinda had a feeling something like this was gonna happen tho, too many people were too bearish and stocks like AMZN had barely begun to recover. As I noted in my AMZN post, I'm not interested in adding puts until AMZN tags 1850+. Expect some shenanigans in the upcoming days (melt-up into close followed by negative news released right after the bell, exhaustion gaps, etc) to keep shaking bears loose from the tree.Note
Got a nice looking textbook 5-0 pattern developing here for a short @ 2890. A test and then rejection under 2875 would confirm the pattern and probably send the index under 2800.Momentum showing bullish divergence and the bear trade is feeling waaay too crowded again. VIX needs to chill a bit as well. Again using AMZN as my bellwether it looks to be drawing a flat for wave 4 and still needs to paint the C leg up.
Of course all this technical mumbo jumbo goes out the door if some negative catalyst drops (which I think is right around the corner). <puts on tin foil hat> Pay close attention to the situation in HK. I think Trump is looking for an exit strategy in the trade war and any kind of "wrongdoing" by China (as seen by western eyes) in how they deal w/ the HK protestors will avail Trump the opportunity to withdraw from negotiations on the "right side of history". The tariff delay imo only adds credence to this theory because i think he was trying to soften the blow from an inevitable collapse in the market when he pulls out.
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As expected the shark/5-0 is developing w/ the index tapping 2890 in the final minutes of RTH, painting the AB=CD as shown above. A move past 2890 ensures it will hit the .886 retrace at 2925. A break below 2875 confirms the 5-0... and that's the play we're going for.It's risky, but I think the risk/reward here is worth it for a short position. I don't think that median line is going to survive another retest so any break below 2875 I think will likely confirm the current wave as an impulse downwards and won't stop until the H&S target (around 2750 - 2770).
That said, I know the bear trade is totally crowded and PPT will likely "manufacture" some positive catalyst to pump us back up to finish the flag @ 2925 where I'd gladly add to my position. Again if you listen to how Trump addresses the HK situation and Xi needs to resolve it "humanely", he's basically laying the foundation for an excuse to withdraw from trade talks. I believe HK will be the bombshell that spikes the VIX a second time this month (cuz you know the VIX always loves an encore)
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Dumped most call hedges and added to short positions. Clearly painting a flat here as suspected. I suspect they might even gap it up once more to take one more crack at that median line. Look at that 4hr money flow... I know that's mostly cuz of the gaps but geez not much interest during RTH.I still haven't gone all-in yet since I think they're not yet done flushing out the bears. Signs I'm looking for are a VIX in the low 16s, AMZN around 1850, and an exhaustion gap or melt-up into the close. Puts are already getting pretty cheap though, I wouldn't fault anybody for adding here...
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Pretty bearish close but I'm not getting too excited... Algos have been loving this weird reverse "handle and cup" to disguise these ABC waves where what appeared to be the initial leg down gets met w/ a full recovery and sometimes a higher high. This seems like the perfect time for one of these misdirects. Plus I don't trust that we haven't tested this trendline from the top yet.I'm not saying to go dump all ur shorts and grab calls but just saying don't be surprised if this garbage move happens in the next 3 days... Especially w/ Jerome "the sackless one" Powell's speech on Friday. Is it really that crazy to think the market will take "act as appropriate" to mean 50pt rate cut in September this time around? That said, I'm not selling a single put until 2750 or below or we get a weekly close above 2940.
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LOL what'd I tell ya? "Handle and cup" in progress yet again. Definitely short here or take long profits at 2930, that massive gap below is gonna get filled by the end of next wk.Note
Algos following the same playbook as the quadruple top in July leading up to FOMC... can't make this stuff up.Note
Not sure how much more evidence you need that the only thing buying now are algos... Fed basically says no easing cycle and we close at the HoD anyway. LOL, Powell's gonna say the exact same thing Friday, and the market will tank making him the fall guy. I'd actually feel for him if his speeches weren't so spinelessly ambiguous. It's him leading the entire market on that's gotten us to this untenable situation.Technically I'm pretty annoyed we didn't crack 2930 during RTH today. They'll either run it up overnight or tomorrow to complete this last motive wave which would complete the flat. Until then, no moves down are real (as seen yesterday + today)...
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Just in the 20min since I posted the update algos ran it to 2931 to tag a higher high. We are now on official reversal watch for the final leg down. Probably happens overnight... booo.Note
Again... matching July price action to a t. Expect a mild recovery in the afternoon, but like I said, all drops are "real" now so feel free to short all rips on the way down to 280.Note
Obvious failed double top and failed triple top just like in July. Treat the 13 WMA as we treated the 3020 level in August in Blood August? pt.1... Weekly close above it and my theory is wrong. But something tells me we're gonna get the Powell/Trump 1-2 just like we did in early August for the sequel...Note
I think wave v has begun... see you guys in the 2700s.Note
Hope everybody enjoyed the bloodbath today... while writing this just saw Emperor Trump has not only decreed to not do business w/ china, but also MOAR tariffs for Sep 1... Sounds like a gap down for Monday to me. Bonds should also invert soon and the yuan will probably tank further. My guess is wave (iii) will probably bounce off the neckline around 2790-ish for the soon to be active H&S pattern and give us a little dead cat bounce on Tuesday before continuing down. Daily RSI and MFI both still not even close to being oversold so we've got a ways to go.
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Expecting a bounce somewhere between the 200DMA at 2800 and the Aug 6 low @ 2775 to end wave iii. Wave iv will prolly fill the gap left from Friday and then wave v will complete this impulse wave down to end the Bloody August correction. Bottom could be anywhere from 2730 to 2650 (my original theoretical low from the 1st pt. of this post) Interesting thing I noticed about those schiff median lines I've been using... they seem to be at the exact same angles as the 1/3 and 1/4 lines (and 3/1 vs. 4/1) in a Gann Fan. Not sure whether this is coincidence, but do note that the measured move target of 2700 is right under the 1/2 line and given how much the indices love to hunt stops, I wouldn't be surprised to see it poke below 2730 and reach 2700.
From there we'll probably get a massive short covering rally to start September, but we'll cross that bridge when we get there...
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Wow, what a gift... Great 5-0 setup here, I don't think this one's getting past the .618. We should be retesting and breaking under the 200DMA in the next couple of days, if not then end of wk.Note
LOL... basically Trump's just doing favors for his buddies on wall street now. Classic pump n' dump in progress on fake news.cnbc.com/2019/08/26/chinese-newspaper-editor-hu-xijin-china-didnt-change-its-position.html
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Yield curve has been inverted most of this morning and getting worse... yet no shortage of bagholders willing to step in front of this bulldozer to pick up a dime. Watch for a rug pull no later than Friday.Note
Inversion's diving like a waterfall yet futures are going up... cnbc.com/quotes/?symbol=10Y2YSShort everything under 2900. If daily close above 2900 I dunno what to say... these crazies have truly lost their mind.
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By now most ppl are aware of the similarities in the charts from December... Given that futures only seem to go up, I'd expect us to go challenge 2880 tomorrow. Again, goes w/o saying but as long as we don't close above 2900, all rips should be shorted. Given all the events surrounding this selloff, a test of the 200DMA during RTH is IMO assured this wk. Meaning we'll be seeing the 2700's soon. Yes it feels like shit every day to see your account start in the red, but honestly futures, vapid tweets, and bunching buy orders to trigger stops are the only ways this market can move up now. You guys know the saying how the market takes the stairs up but the elevator down? Well when you see it start taking the elevator up as it's been doing for the past several wks, it means we're prolly mired in a bear market at least for the immediate future.
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2880 level tapped... Load here all the way up to 2900, dump em before the wknd. Double your money, simple as that.Note
I'm talking about puts of course, you gotta be either a computer or a complete moron to go long here.Note
Put load at 2888. That's where I'm going in heavy.Note
Wave ii looks like an expanded flat that is done or close to done being painted... Expecting a red afternoon down to 2875Note
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Closed right at my load point of 2888. Grabbed some more after the bell as well. Gonna hafta watch overnight to see where this is headed, but my gut tells me this was a complete pump job. Even media is having a hard time finding a catalyst to justify the run-up. Looking at the chart of stocks like AMZN it looks like it's basically painting a bear flag for wave 4 and gettign ready to start wave 5. Again, daily close above 2900 and I'm wrong, but they've ran this "handle and cup" garbage so many times you just gotta kinda laugh when it happens...
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Currently pressing the top of the entire trend down.... Last round of puts here at the open. If we gap and run then I'm done w/ this scam but the chance remains for an exhaustion gap so I'll take the risk. We are now technically still in a wave of a potential huge leg down so again it's all about risk/reward.Note
Absolute craziness.... we're now at the same level we closed at last Thursday prior to finding out about china/us raising tariffs on one another. Plus china has just moved troops across the border into HK and the yield curve is still inverted. I guess the pump is based on the expectation for Trump to call off the Sep 1 tariff hikes. Considering where we are, same rules from before apply. A weekly close above the 13WMA and IMO this downtrend is over. But until then we are still in a post-bear flag leg down until a higher high (2940-ish) or in an ascending triangle as a corrective wave. My make-or-break now is a daily close above 2940 and that median line we've been using to short is back in play.
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How this thing is still trading in the 2900s is beyond me... We were here prior to finding out anything about retaliatory tariffs on either side, and there are articles saying aides admit Trump made up the "good phone calls".My only guess is that they're propping this trash up to give the big $ that was on vacation in Aug a chance to dump. This means if I don't see some significant movement by the bears this first wk of September, I'm probably going to exit this trade and stop burning premium on this scam.
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Clause de non-responsabilité
Les informations et les publications ne sont pas destinées à être, et ne constituent pas, des conseils ou des recommandations en matière de finance, d'investissement, de trading ou d'autres types de conseils fournis ou approuvés par TradingView. Pour en savoir plus, consultez les Conditions d'utilisation.