Month: June 2022

$NQ Gives Us a Different Picture

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Unlike the S&P futures (which only has the look of a 3-wave decline—which is why I labelled it as an orange “A” here), the Nasdaq 100 futures lacks that defect, as it made a lower high on 6/28 (green arrow in the chart below), which gives us a full 5-wave decline (instead of only 3).

That should be an impulse wave of some kind, and I have labelled it as green “1” below.

Now, it it is possible that green “2” is an expanded flat, with “2” coming back to revisit the “4” of the prior (blue) degree, which is common:

NQ

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Perplexing

dereckcoatney1 Comment

Let’s look at a couple of things.

Yesterday, I pointed out the bearish wedge on the Russell that broke down and that we were backtesting (here). From that, one would expect the market to drop, and we did. But this stunning reversal is perhaps not quite what I would have expected. But, looking at $IWM now, I can’t say that too much has changed yet, despite the strange gap down and subsequent, huge short squeeze.

We are, after all, right back at the wedge again, as if we’re retesting it for a second time (green arrow):

IWM

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Some Observations on $IWM

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I pointed these out in the chat lounge, but I think I will also add them here, too. If we do get a big rally and clear some of this up, good. But until then, we’re retesting a bearish wedge (green structure, noted previously here) from beneath and we’re under some important prior highs. As it stands, it’s not a great look. It can improve, but until then, it looks sketchy to me.

IWM

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.

One Structural Observation on $ES

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It is unclear to me how to count today’s consolidation on lower timeframes. It’s quite messy. I will need to wait before I can point to something I like (regarding a local count for today).

My general longer-term assessment remains favored, though until we see lower prices, the bullish view also remains possible.

However, I do want to point out this general structure. It’s not a great a look. I cannot guarantee that it will break down (though I worry that it may), but if it does, I have noted the target:

ES

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.

And Let’s Review the Bullish Case, Just in Case

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The bearish view presented this morning still looks good. That said, we’re now “in between” both prior highs and lows, and the bulls can still pull a rabbit out of their hats here if they need to. I don’t think it’s as probable, but I also cannot rule it out.

The bullish view has the cash session probably finishing a 1-2 (of blue degree), with the “2” being an expanded flat, like this:

SPY

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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.

Update on $ES

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The rally from mid June forward (green arrow) continues to look “corrective” to me at this time. If it is, we have retraced to an appropriate level for it to be complete.

If it is complete, we may head down to challenge the lows. I have drawn the red structure (ending diagonal) on the chart as a hypothesis only. I speculate about that because of my reluctance to believe (so far) that we’re in that much trouble. So, let’s just see how things progress from here. My earlier versions of the red wedge were steeper, and that’s still on the table, as is the possibility that we’re in something worse than a diagonal. But, let’s not get ahead of ourselves yet. I think a challenge of the June low is a sensible target. I think the 250-week EMA is another sensible (eventual) target as well (though we may have a rally for pink 4 in between here and there).

ES

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.

If We See Weakness From Here, This Is My Plan

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It is possible for the market to continue to go up in the short-term. We are no doubt certainly overdue for a big rally.

But, given the wave balance discussed here, the general “look” of structures here and here, the risky wedge on the $VIX (here), I am leaning to the possibility of further weakness; though, if we do get that, I am not expecting Armageddon. I am favoring something about like this:

ES

The 5/20 low (where that orange “B” on the far left of the chart is) was an excellent candidate for the low. But, we needed to see a full 5-wave advance off that low, and of course, the consolidation in early June—which I had hoped was a “4,” turned out not be that at all, as the structure completely failed. That has made everything (going up and down) look to be unfolding in 3-wave moves. A gnarly, unending series of corrective structures.

If we fail here, then the rally from our recent low, will also be only in 3-waves, and this can continue for a while still.

If we do drop, this falling wedge accomplishes many things:

  • It allows us to fall in a final “5-wave” move (for yellow “c”), without us needing an actual full-bore “crash” to do it, which I still think is very unlikely here.
  • It allows us to retest that 250-week EMA, which we do need to do from time to time; might as well do it now.
  • You will see how well this structure can revolve around that EMA. Getting to it (for pink 3) should produce a bounce (for pink 4). A lot of people want to buy that. Then a drop will make them all regret their lives, as pink 5 takes out the very EMA they just thought would be a good long-term buy. Panic sets in, everybody freaks out, and we get the nice bear trap down there (they expect a crash) while bulls will then be afraid to go long because they just lost the “support” they just bought (the EMA).
  • And, finally, consistent with the long-term view (here), it can offer us a very nice long-term fib relationship down there around 3318.

So, let’s see what happens. We can certainly keep going up, but if we don’t, which is what I’m leaning toward, I think something like this can happen.

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.

No Significant Changes to Analysis; A Couple of Additional Observations

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On $ES, I’m still looking at the two possible outcomes, though I am leaning more strongly towards the bearish resolution, presently. This is based largely on the shape of the structure we are forming in the indices (other examples here and here).

Is it much easier for me to look to bearish outcomes after a squeeze, and this may have been just that. Breadth has not been great in this rally, which does trouble me (in addition to the “shape” of the structure).

Let’s reexamine some of the technicals and fibs.

In the last update on the S&P 500, the bearish view warned of reaching “equal legs” between orange “A” and orange “C,” or going a little higher to the 50-61.8% retracement of the decline from 5/30. And, as you can see, we passed “equal legs” and did poke into the box:

ES

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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.

Caution on $NQ

dereckcoatney1 Comment

I’m sorry to be that guy who complained about the need for a rally, who then folded like a wet napkin the moment he got it, but I’m not feeling good about the structures.

The Naz has made a sort of “funnel,” with what looks like a triangle right in the middle of it (we’ve discussed that shape elsewhere already). I’m not happy to see a triangle (if that’s what it is) that sits “low.” It’s good if, like my crayon drawing on the right, it sits “high” after a vertical rally. But when they sit low like this, smashed in with the waves that precede them, they’re more likely to be “B-Waves” instead of “4th Waves,” making this structure more likely to be countertrend rather than impulsive (meaning the trend is still “down.”)

NQ

If it is countertrend, of course it can still go higher, but, if I had to place probabilities, I lean to the view that this rally will fail.

Now, if things develop and we keep going up and the cash sessions (which lack some of the defects of the futures charts) look very good, I may revert and become more bullish again. But until them, I am very cautious here for the time being.

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.

Observation on $RTY

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A few trend lines and shapes I want to point out.

We may draw this wedge (green) on the Russell. If this structure stays like this, it has a bearish bias. We’re at long-term prior highs (the orange lines). And we’re at the channel (purple thing) built from the COVID crash low through the May 12th low.

What does this all tell us? Not much, yet. A big punch like this morning doesn’t always reverse sharply, so I won’t be surprised if we drift up more, or consolidate, but: the markets still have a lot to prove, I think.

RTY

The S&P is exactly at the “equal legs” pointed out in the first chart here. So, we’re definitely not out of the woods yet.

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.