A Few More Comments for the Day

I just want to bring a few more thoughts together here. Yes, this could be a bear wedge on $ES instead of a leading diagonal:

ES

But, that would entail that total catastrophe looms ahead of us. And yet, I continue to lack the evidence that I would like to see for such a thing to happen (and, so far as I can see, the “new lows are coming” seems to me to be the consensus here).

For starters, the awesome selloff on Monday appears to have been retail margin clerk liquidation to the tune of over a trillion dollars. I can’t see that as anything but a capitulatory bottom (the tweet re: that is here; note the scale on the graph, the user who posted it did not carry enough zeroes). Retail does not capitulate near a top nor in a “middle.” They sell—whether by choice, or, as in this case, when forced selling occurs—at bottoms. At least that’s the thought here.

Another point, bringing this back to focus from my post the other day, I wanted to see the Fed’s National Financial Conditions Index, the data for which is delayed by a few days. And now, so far as things went up to the end of last week, still no signs of stress in the credit markets (last week’s datapoint just came out today:

NFCI

Now, since we didn’t get an explosive rally for the FOMC minutes, we may not, after all, quite be doing a sharp “V-Bottom,” but a small Wyckoff bottom (I discussed those differences here). Now, if we simply rally sharply from here, this idea is killed, but if we don’t produce that immediate and forceful rally, we may be looking at a nest of ones and twos coming. If minute (blue) 1-2 is done, we will need to see minuette (orange) 1-2, then subminuette (red) 1-2 like this roughly:

ES

And you can see the Wyckoffian nature of the range if we clean it up like so:

ES

If we don’t fall apart (as I think most expect here), my intermediate-term expectations are roughly this. Minute (blue) 3 would typically go to the orange box and consolidate (for minute [blue] 4) before heading to 5. But, it may also go to either of the two noted fibs above that box. We just have to watch for a period of consolidation to find that 3/4 combo. This rally should take us out of this downtrend (it should break above the orange trend line), and then I would eventually expect some kind of retracement in 3 waves for minor (green) 2.

ES

So, that’s the thought here. If we crash, I will delete this out of embarrassment lol (kidding)


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