So How Bad Are Things? Weekend Market Update

Alrighty, there are a lot of things I want to discuss, so I’ll just dive right in. We’re seeing some delicious selling, and so we need to ask: Is this it? And if not, then how serious is it? And I will try to address those in this article.

First, Is this it?. I don’t know yet, to be blunt. And as much of me that wants this to be it (because I am bearish by nature), I am not yet convinced that it is it. And I will present some evidence that questions whether this is really it.


Bitcoin

Now, for the Great Liquidity Thermometer, I have been warning that it risked failure and with it equity markets (e.g., here). The frustrating part has been that Bitcoin often leads, and I’ve been watching it closely for signs that it would give up that head and shoulders pattern neckline before equities took a bath, but it held on to that level for as long as humanly possibly before finally taking a bath concurrently with equities.

At any rate, it’s given given us something more of an actual plunge—finally—but now how does that plunge look? Well, on the one hand, we have no idea yet if it’s finished. It could still be well within the move. If it is, we will want to see much lower prices still, as the H&S pattern’s measured move is somewhere deep down around $12-22K. And yet, I will note two features of the plunge so far.

The first feature is the volume profile. Bitcoin’s little plunge so far has taken it (unsurprisingly) to a POC (point of control, red line, the price at which the greatest volume has traded in this timeframe) and it has a huge volume node it will need to work through in order to go lower:

BTC

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Member Request: A Quick Look at $AMZN and $TSLA

A member has requested a look at $AMZN and $TSLA.

I think that Amazon, like so many instruments, has been in a triangle of its own. In its case, this latest structure counts well as 3-wave A-B-C (in blue), which may be the final 3-wave structure of the triangle as a whole. If that’s so, I would expect it to begin to rally.

AMZN

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$AMZN Is a Perfect Example of What Bears Don’t Want to See Here

A member has requested an update on $AMZN, and it’s a great example of what bears don’t want to see here. Much like how $AAPL has the look merely of a correction (discussed here) so too, does Amazon’s decline. The diagonal (red structure) going up was fine for bears, so long as that was the c-leg of a correction (discussed here). But instead of getting a deep, impulsive sell, the first leg was a clear 3-swing move with a triangle in the middle of it (that’s the minute [blue] a-wave), and then the second drop barely took out the low of the first drop. That’s just not an impulsive structure to the downside. The second drop (if impulsing down) should have been a 3rd wave and should have been tremendous.

So, now it looks like a 1-2 pump to the upside, and gives us a target for the 3rd wave in the orange box above.

AMZN


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A Way to Count $AMZN Here

From its all-time high in July, $AMZN counts well as an impulse down and a deep correction, deep enough to make everyone completely forget the impulse down. The minute (blue) c of minor (green) 2 is a beautiful, textbook ending diagonal. Wave 3 should target about 2800.

AMZN


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The $AMZN Wyckoff Pattern of Distribution Remains a Real Possibility

I recommend that you review this tweet from June. In it, I used a Wyckoff Pattern of Distribution Schematic and outlined the similarities between it and $AMZN. At the time, I had believed that the April 2021 high was the UTAD (“Upthrust After Distribution”) and I took a lot of jeering from folks when it then went on to make new highs in July.

However, celebrating may be quite premature as, with only some minor adjustments, that new high could itself very easily be identified as the UTAD. One reason I remain interested in this possibility is the basis for my retraction of my bullish call on the stock (you can read about that here). Simply put, we’re just not yet moving impulsively. We continue to move almost exactly sideways, and until we actually do (move up) we run the serious risk of being sold to here.

So, I have updated the schematic and present it to you here, and the original blueprint can be found below it.

AMZN

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$AMZN Has the Right Look

As with other instruments, $AMZN just has the right look for a 1-2, and so that is my primary count. If we struggle to advance beyond the high of minute (blue) 1, I will revert to the bear count, but I lean to the view that the market remains bullish here and that the panic aroused in the public by means of the Evergrande saga is just a way of forcing suitable volume into the market so that institutions can accumulate in size.

My target is the orange box above us for minute (blue) 3.

AMZN


[UPDATE]: This no longer has a great “look” for a 1-2 pump. The pullbacks are too deep for my tastes, and the latest rally off the 10/4 low looks to be only in 3 waves, and I don’t like that. I am cancelling this call. I will need to monitor the price action from here for a bit prior to making another call.

AMZN


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Two Possibilities for $AMZN: Either One Should Lead to Lower Prices in the Short-Term

In this tweet from the 21st of August, I suggested the idea that $AMZN could bounce to the $3,500 area, which it has since done. From this point, there are two alternatives that I think are most probable.

The bearish case would have expected the rally from the 8/21 low to be a correction (in this case, blue b), before another move down to blue c. We would expect the move to blue c to proceed in 5 waves, much as blue a proceeded. It would look something like this:

AMZN

One reservation I have about this is that blue b as I have it labelled actually looks somewhat impulsive meaning that we may expect the most recent highs to be taken out at some point. However, even in this scenario, it looks like a 5-wave pattern complete, in which case it is due for a pullback in the very short-term anyways. In this scenario, we would label it something like this (as blue 1 instead of blue b):

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Note: When my work is first published on this website, it is made available to patrons who support my work through my Patreon account. Over time (usually after a period of a few months), I make 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.