I Ain’t Skeered: Weekend Recap of the Markets

My basic views remain unchanged. That said, until we see a big rally, we have yet to see a big rally. I would have been pleased to see big, fat reversal candles across the board, showing some real institutional support in the markets, but they have no big appetite yet. If they are active in the markets here, they are active only very secretly, buying only to the extent that exactly offsets the supply, keeping prices in a weekly doji candle. If they are here, they are absorbing the selling and not a penny more.

Given the monstrously bearish sentiment I believe has washed over the public, I would like to believe that retail is liquidating here, but until we get a bid, there’s no way for me to know.

In this article, I will simply walk through a lot of charts and other data. Most of them can be interpreted to suit your own expectations here, whether bearish or bullish. That’s how the bastards left us hanging this week, lol. But, I hope the presentation of information is of some help to you.


Local Structure

I didn’t like having to point this out today—the possibility of a triangle—because I remain fairly well convicted about my bullish call, and yet, it does present a threat, and I would feel terrible if I didn’t at least point it out and we puked.

Now, this range we’ve been in this week could absolutely just be a Wyckoff accumulation. If it is, it is harmless:

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.


A Few Observations on Junk Bonds

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

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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.


Let’s Look at a Bunch of Things

As most of you already know, I expected a bounce, and so far, we’re getting just that. Then today, I expressed openness toward the idea that instead of only reaching the 3/3 high (which could eventually produce a “flat topped triangle”), we could also go higher to form “parallel rails.” One reason for that is the distance I think Apple may need to travel: were it to reach its bull wedge structure, the S&P 500 would need more space, too.

But the structure today has me even questioning the parallel rails thought now. And the reason is: the S&P 500 is moving more that Apple is. And if Apple needs to get to the bullish wedge, the S&P is probably not going to be confined by even parallel rails here.

So, let’s examine some things. The parallel rail look (fake bull wedge breakout look) looks like this, below. The problem for this is that intermediate (orange) “C” should be a 5-wave move, and while that would have been okay before the FOMC drop, it’s not so great now. To be frank, this looks more like a 1-2.

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.


Here’s a Thought for You on High Yield Debt and What I Think It’s Not Telling Us to Do Yet

So, I look at lots of risk signals, and I love watching $JNK. Toward the top of the market, I was warning of caution partly because of how high yield debt was performing relative to equities (e.g., here, here). And that turned out to be prudent as we sort of fell apart. But as we continued to fall, and as we’ve entered this range, I’m not entirely concerned now because of many things I’ve discussed before (e,g, here, here). And that is despite junk bonds continuing to look like total trash here.

So here’s the thinking on this:

  • I have a lot of signals that look ok
  • Junk bonds look completely awful

What am I to do? Am I to assume that junk bonds are telling the truth and that everything else is misleading us? Or am I to conclude that the majority of evidence points to not such a bad risk off environment (no crash, no bear market—at least not yet)? And if the latter, then how do I explain junk bonds?

And so here is how I am going to try to explain that. You see, as a refresher—and to save you a ticker lookup—$JNK does look like total shit here:

JNK

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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.


A Few Additional Notes on $ES

Despite us continuing to be rangebound, and thus a little unclear on the next direction, I do favor the bear count still on $ES. There are a few reasons.

First, let’s look at how this could be counted internally.

  1. One thing to note is that in contrast to the last bear counts, I have upgraded the wave degree from minuette (orange) to minute (blue). The reason for that is that if this is the beginning of a move down, the structure has become quite large for minuette degree.
  2. What this could mean, since I believe we need to go very low to complete minor (green) C, is that minute (blue) 3 could be a monster, extending perhaps all the way to the 3.618 extension, before flagging in the 4th wave before then giving us an equally deep 5 (or a 5 that is even longer than 3)—the extension in an impulse can happen in any of the 3 motive waves.
  3. I have noted the invalidation level for this count. Above this, and perhaps this crap we’ve been in has been a B wave.
  4. This count looks great because (on my labelling here) minute (blue) 1 is a clear 5 waves, but minuette (orange) b is not. And anyone who wants to count this as a correction has to ignore that and pretend like they don’t see that. That little b is a clear 3-wave structure, and a correction here shouldn’t end on one of those.
  5. That said, the invalidation level is ridiculously close to us and I won’t be surprised to see it breached because we’re so close to it now and the market tonight just keeps melting up right now. But, it’s not over ’til the fat lady sings.

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.