Month: April 2022

Let’s Examine $FB and Speculate About a Target

dereckcoatneyLeave a comment

My last post on $FB was here. In that post, I suggested that a correction of cycle (yellow) degree may be completing. A further revisiting of the range identified in that last post has produced a strong rally, and the structure counts well as complete.

So long as it stays above the orange box beneath us, we may assume that it has entered its third wave of cycle degree. That wave targets the orange box above, roughly $700. The move from here to there should proceed in a 5-wave advance, and we would expect it to take several years.

I will update this from time to time with shorter term structural developments as the emerge.

FB

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

Let’s Revisit $COST

dereckcoatneyLeave a comment

My last post on $COST was here. In that post, I identified a near textbook bearish wedge that had developed. And unfortunately, that wedge never broke down and the stock rallied to new highs.

That new piece of information is telling: why didn’t the bearish structure break down?

Answer: the market may not be as bearish as we were expecting here. Given the potential for the markets as a whole to break up sharply here, we can reinterpret the structure on this stock as a large inverse, with the right shoulder probably complete.

Should this break up sharply, the target for this is over $700. We would like to see this “right shoulder” stay close to or above the “left shoulder.” Falling below the 12/2 low will begin to cast doubt on the interpretation.

COST

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

A Brief Look at the German $DAX

dereckcoatneyLeave a comment

After the utter carnage the German $DAX endured after Russia’s invasion and the resulting effects this had on energy policy in Europe, let’s see how it looks now.

And in fact, there may some room for optimism. Though the selloff was sharp, and though it remains below a down trend line, the rally from the lows has been impressive and it now sits well above all of the prior highs from 2018-2020.

Furthermore, nice, sharp selloffs with sharp rebounds lay the potential for inverses, which I have depicted below. As absurd as it is for me to point these out here given the news flow, not doing so is a mistake I won’t repeat again after 2020 (I saw many, but I refused to believe them given the pandemic and lockdowns). This time, let’s at least acknowledge their presence.

If it rallies again, it may go at least 23% from here, if not even further.

DAX

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

A Few Observations on Junk Bonds

dereckcoatneyLeave a comment

I want to make a few observations on $JNK. I like to watch it (and other high-yield debt instruments) for signals. Now, when we simply look at the chart, it’s in a total free fall, a total bloodbath:

JNK

Read more “A Few Observations on Junk Bonds”

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

Next Major Targets for the S&P 500 and the Psychology I Think Will Accompany Them

dereckcoatney1 Comment

This article is long and perhaps even tedious. Forgive me for that. There’s a lot I want to cover.

I know things look like hell in a hand basket at the moment, but I think things are proceeding according to my expectations. I also know that it’s been frustrating the last few days as the market capitulated, but I have not been interested in that because—to my mind—that is chasing into a low, and much like chasing into a high presents us with great danger, so does, I believe, trying to catch every inch of this move down we’ve had. I think we’re bottoming, and that can reverse sharply at any moment, and I’m in no mood to be caught in that.

I could also be wrong here, and I will be the first to own that if I turn out to be. But, looking at things as a whole, it seems to me as if half the people who are freaking out about their belief that the Fed has no options here have never actually lived through a rate hike cycle before.

The chorus identifying today with the likes of 2008 seems to me to have not actually lived through that as an adult. This is literally nothing like that. By 2008, people were defaulting on their mortgages in droves and the banks were already starting to crack. Literally the biggest financial giants in the world were crumbling. It was a literal catastrophe. Nothing like that is happening here. At worst, so far, the rate of change of growth has slowed. But we’re literally still growing. And the banks are flush with cash. No stress there whatsoever. And while prices may be a bit high by some measures here, they may not be that high (see my section on prices in this article).

So, if the Fed has to hike quickly to combat inflation, it may eventually have an impact. But keep in mind, in 2008, the Fed was already two years into a hiking cycle. We’ve hardly even had a hike at this point (I covered the timing of hiking cycles and market tops in the second section of this article). Based on that, and the shocking sentiment readings we’re getting here, I think we may have years before we top.

In addition to the points made about sentiment here, where 2 of the worst 23 “bull percent” readings were discussed, we now have 3 of the worst 24 “bull percent” readings, and even better now, the “bear percent” reading this week was the 5th highest ever.

We are right now experiencing a total sentiment washout.

If we were having this price action this year, and everybody interpreted it as a nice, healthy correction, eagerly anticipating new highs, with sentiment surveys bursting with joy and excitement, it’s time to be bearish. But right now, same price action (“every rally fails for months”) and people are calling for Armageddon. In my opinion—and I may be proved wrong about this—I believe this is setting us up for an opportunity that only comes to us a few times in a lifetime. Mid-nineties sort of rally material is possible to us here.

I know we’re all enjoying making fun of David Hunter and his ad nauseam melt-up call, but he is effectively right. Bear in mind, the man has been in the markets for decades, and he is basically right regarding sentiment. We’re nowhere near a euphoric high. He’s right about that, I think, and yes, it is funny that his wanting to make the big call keeps getting stuffed in his face. That actually serves his call well now, as now that he’s become a meme, people will laugh at his next melt-up call, and I bet that’s when we get it.

The other day, I referred to a structure on Apple and I want to discuss it at greater length here.

This channel, despite moving “up,” is still effectively “consolidation,” because of its choppy nature:

AAPL

Read more “Next Major Targets for the S&P 500 and the Psychology I Think Will Accompany Them”

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

$RTY: Structure and Target

dereckcoatneyLeave a comment

As with the S&P 500 (here), I am interpreting a particular structure, and the same can be counted on the Russell.

Helpfully, on the Russell—as opposed to the S&P—it has generated two distinct triangles for us (those are the “B-Waves”), which makes it easier to identify. We have excellent fibs here and I believe it is now complete. We kissed a great fib.

As with the other indices, most people are aiming for from between 1550 to 1725. It’s been rough avoiding playing to the downside the last days, but I believe psychologically preparing oneself for the other direction is important here.

What most people are waiting for—here and on the S&P—is an opportunity to go long. But I have a strong feeling that the market is going to deny all these folks looking for slightly lower prices from getting a good entry.

People are waiting for the Fed to give them permission, and that’s not going to happen. It’s just not that easy.

Even if the Fed is dovish, I believe the market will already be high-tailing it out of these lows, forcing people to chase into higher prices. I believe there is a good chance that good news will hit the wire on Sunday before Globex.

RTY

I believe a major low (of cycle [yellow] degree) is in, and we will head back to all time highs. Eventually, we may even go as high as 3370.

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

What Bitcoin Is Telling Me About the Markets Here

dereckcoatney1 Comment

As many of you already know, I don’t often trade crypto, but I watch Bitcoin like a hawk because it has turned out to be a terrific reflection of systemic liquidity. It can sometimes warn us of impending disaster because if dollars become needed above all else (in a liquidity crisis), Bitcoin is often the first to go.

Now, I have played with various bearish alternatives on this instrument for some time, expecting it to move lower, but ever since January 24th, it’s only moved up and to the right. And while that may give us a “bear flag,” if equities were on the verge of a 10% collapse, I would expect this “flag” to already have broken down. And it’s just not. Now, if it does, I will be listening loud and clear, but, it may actually simply be undergoing re-accumulation.

A few weeks ago, someone noted that long-term Bitcoin holders (long-dated, large, “whale” wallet addresses) were sitting tight, not selling. And that it was the short-term, smaller wallets, in which all the transactions were taking place, and they were selling. I can’t find the website he used to track that information, but if I can remember it, I will share it in a later post.

But, it looks like whales are in no mood to get rid of it here, and even want more of it. And that should be something we wouldn’t expect to see before a massive dump to $SPX 3700.

Maybe all the laser-eyed kids are simply just all gone?

I mean, I sort of actually feel that on Twitter, too. I mean, all the traders, especially the young kids with all the bravado; it’s felt to me sort of like they’ve all left. I can detect that to a degree because of my having a large account, and the kind and number of responses I get. It’s quiet, and has been for months now. I sort of think retail might all have already been destroyed here.

Think of the stocks they liked: all the meme-ish things. Hell, most of those are down 70%+.

At any rate, looking at the chart, people are mostly counting Bitcoin as needing to head lower from here, but I’m no longer convinced that’s going to happen. One thing I’ve noticed over the years with counting wave structure is my one complaint about most of the Elliotticians out there: they’re too eager to label waves in “textbook” fashion, and the market rarely gives us such textbook structures.

And you guys have all seen me use variations that I think few are looking for. Hell, I sometimes think that 50-60% of the time, we’re in triangles, and I almost never see anyone count triangles out.

But, at any rate, much like the indices, Bitcoin is an excellent candidate for a very strange “flat” here, which could be done at any moment. It’s recently just reached a fib relationship between what I’ve labelled here as primary (pink) A & C, and any fib relationship in a flat will do.

BTC

So, my point is, the vast majority (all that I know of in fact) of Elliotticians are now looking for this to move sharply lower, taking out the 1/24 low. And that would point to a liquidity rush to the exits. So, they’re also carrying similar counts for the indices. They expect everything to do that here. But I must insist: my greatest trades have been precisely when I’m looking where too few are looking. I can tell when one side of the boat is crowded, and this is the most extreme example I’ve yet seen.

But I am very skeptical of that consensus right here. And so, much like I believe the US indices are in a flat, hopefully done now after today, Bitcoin may be, too. And if it is, there’s not enough evidence pointing to a big crash, but rather quite to the contrary: if this count is correct, it will go on to make new all-time highs.

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

Next Week Will Obviously Be of Paramount Importance

dereckcoatney1 Comment

Despite the strong selloff, the fundamental picture (on my interpretation) remains intact.

There remains a good fib relationship between legs of this correction, and despite the blood in the streets, we remain above the 2/24 low. It is frustrating to me that we’ve come this close to what I continue to see as the consensus view (that we’re headed to 3800-4000), but perhaps that will only serve to encourage those who are making that call.

ES

Read more “Next Week Will Obviously Be of Paramount Importance”

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

$AAPL Observation

dereckcoatney2 Comments

In line with my present thoughts about the indices, $AAPL counts well enough here and has retraced to the level we would expect for such a scenario.

The target for this count—if it is correct—targets $173-$177 (or higher) for minuette (orange) 3.

AAPL

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.

Cash $SPY Structure

dereckcoatney1 Comment

Whereas on futures, where we may interpret the structure as completing, on cash $SPY, we may also interpret it as still in development. If that is so, we may identify today’s weakness as building the “right shoulder” only now. The measured move of this inverse could take us to the green trend line, as the measured move of the inverse and the trend line are both at about the same place.

Bear in mind that I believe this little inverse is itself the right shoulder of a much larger inverse (5th chart in this post).

SPY

Note: When articles are first published, most of them are made available only to my Patreon supporters (I do try to publish some public posts on occasion). Over time (usually after a period of a few weeks or so), I make all of the work public. To gain access to my work when it is produced (or to join my Discord chatroom), please consider becoming a patron. Note that there is a 7-day free trial period. More information may be found on my About page and on my Patreon page.