Some Weekend Thoughts Before the Abyss: Bear Porn Edition

I just want to organize a few thoughts this weekend. And I would like to say something obvious, something that should go without saying, but I want to make sure some folks aren’t upset.


I have been open to bullish outcomes for much of this year. Why? Well, it’s because I’ve lived through rate hike cycles before, and usually they’re not quite this bad (in fact this is by far the worst in history). And I also know that, historically, “technical” bear markets are just as common as long-lasting bear markets that go much deeper. And in April in particular, sentiment deteriorated so sharply that I became alive to the possibility that we may have been much closer to a bottom than I had at first believed possible. And so I wanted to remain open to that possibility—that the bottom could be at hand. Now I am changing my mind here in the short-term, but it’s almost entirely due to technical reasons. There are structures forming in the markets that are almost certainly very bearish. And I want to respond to those. So, I’m not trying to be edgy, or cute, or flip-floppy; I’m simply acknowledging that bear flags are bear flags until they are not. And many of these are well-defined. In fact, all year, one thing we have lacked is really good bearish structure on the way down. And now we have them, so we should pay special attention.


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Note: When articles are first posted, 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 months), I make all of the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page. In a nutshell, Tier 1 members ($20/mo.) get access to the articles, Tier 2 members ($35/mo.) get access to those, plus counts on about 20 other instruments, plus Discord server access.


Weekend Smorgasbord of Observations

I think I will simply walk through a pile of everything I see here.


1. No Matter How I Slice the S&P, I Think We Will Go Higher

There are 8,000 ways to examine the S&P here, but in general, I think they all still sort of point up next.

On the most bullish view, We have broken up out of a bullish wedge inside a bigger bull flag in a wave 1 & 2 in minor (green), then minute (blue), and then finally minuette (orange) degrees. On this count, we should be entering the most powerful central thrust of this impulse wave.

In support of this count, first at the lows, and then twice this week, the drops have felt awful, steep, sharp and abrupt. And that’s what “twos” feel like, generally. They are spooky, no one wants to buy them, and as a result they miss the “threes,” which is where the real money is made. So if we move 300-400 points next week in a real hurry, we might be doing something like this.

ES

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Note: When articles are first posted, 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 months), I make all of the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page. In a nutshell, Tier 1 members ($20/mo.) get access to the articles, Tier 2 members ($35/mo.) get access to those, plus counts on about 20 other instruments, plus Discord server access.


Green Shoots?

So, I’m just going to rattle off some things I see today in a list. They may be promising signs, but there’s still no telling for sure yet as we remain deep down in this lower range and it will be better if we start moving up, which we haven’t really done much of yet.


Bitcoin, as discussed late last night just before I went to bed to enjoy my sleepless nightmares, did, in fact, have a strong reaction to that fib, up now about 11% after touching it and briefly piercing it:

BTC

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Note: When articles are first posted, 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 months), I make all of the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page. In a nutshell, Tier 1 members ($20/mo.) get access to the articles, Tier 2 members ($35/mo.) get access to those, plus counts on about 20 other instruments, plus Discord server access.


Member Request: Where Are We at in the $AMZN Wyckoff Structure, and Where Can it Go Next?

A member has submitted a chart request for $AMZN. The first thing we can obviously note is the Wyckoffian nature of the pattern over the last 18 months or so. I won’t bother to offer a count for this structure as it’s virtually impossible to get it just right. But, there are some important things we can discuss.

  1. A Wyckoff structure such as this is necessarily either accumulation (or re-accumulation in this case), or distribution
  2. Despite what one might initially think looking at it today, we cannot quite yet conclude that it is distribution (it probably is, but we need a little more time and price to be sure)
  3. If this is distribution, where I have the green “A” is called a “sign of weakness,” and the green “B” is a point of supply (any further failed rallies will be the “last points of supply”)
  4. It is notable that the point of supply came at the midline of the range we’ve been in
  5. Falling below the range a second time (we did at green A, and we’re doing it again now) is decidedly not a good sign
  6. A typical Elliott wave structure we would expect to see falling from the November high is (at the very least) a zig-zag, with the two legs being (at least) equal in length.
  7. If this continues to fall, that provides us with a target of $2,222 (noted on the chart)
  8. However, we must also note that re-accumulations often end with what it called a “spring.” That’s a terrible drop at the end of the consolidation that shakes out all weak hands prior to a major markup. If this sees strength, then we may simply be in that process now.

Takeaways:

  1. So long as the midline of the old range is resistance above us, we should probably expect a move to green C
  2. If we see a huge high volume daily bar come in, beware of the possibility of a spring here, instead of a “sign of weakness”
  3. Until/unless we see that, this chart remains decidedly bearish for the time being
  4. I am keeping an eye on this one on the Other Counts page, and will be monitoring this there for a while

AMZN


Note: When articles are first posted, 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 months), I make all of the work public. To gain access to my work when it is produced, please consider becoming a patron. More information may be found on my About page and on my Patreon page. In a nutshell, Tier 1 members ($20/mo.) get access to the articles, Tier 2 members ($35/mo.) get access to those, plus counts on about 20 other instruments, plus Discord server access.