Month: June 2022

$NQ Gives Us a Different Picture

Dereck's Trades

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

Dereck's Trades1 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

Dereck's Trades1 Comment

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

One Structural Observation on $ES

Dereck's Trades

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

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

Dereck's Trades1 Comment

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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