Weekend Analysis of the Markets: “My Eyes Are Up Here Edition”

The S&P 500 

After getting a big whipsaw premarket on the Jobs report, we then went on to make another big whipsaw in cash. Because of the strangeness of the structure, I de-risked (noted here). Now that the session has unfolded some more, I can note that we’ve only made lower highs and higher lows, and so it’s possible that we’re forming a triangle:

SPX

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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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


And Here’s a Look at the Bearish Scenario

I have looked at what I would like to see if we’re bullish. Now let’s see what things look like for the bears.

If we’re bearish, we need this to be either a 2 or a 4 or something—some corrective rally. And the best way i can see for that to happen is no different than how I have been: it almost certainly must be some kind of expanded flat. One issue is this. If we’re actually just squeezing the bejeezus out of shorts before a plunge, we’re not by any fibs here at the moment:

SPX

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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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


And Let’s Look at Just a Few More Things (Yields, Dollar, Bitcoin, $VIX, and $JNK)

Just a few more observations I would like to make this weekend.

The 10-year yield has a very well-defined head and shoulders pattern up here at the high. This is a very good sign for the bulls:

10YRYLD

This doesn’t have to mean anything for Monday, but it’s going to help soon I think.

The dollar is powerfully overthrowing its bearish wedge:

DXY

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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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


Three Quick Thoughts

I continue to anticipate this outline and am open to things getting dicey at any moment. If a dirty, mean old bear put a gun to my head and made me justify a top today, here is how I would do it.

1. Though we’re a little off regarding fibs given in the “Roadmap” (we’re not quite high enough using those labels), an adjustment can improve this. By moving Green A to a prior high, more in line with the high made on the futures market, we came within 7 points of a fib strike today, and that is good enough. Also, if we’re repeating the dot-com bear market fractal, the S&P 500 came close to the 250-day EMA, but didn’t quite touch it at this point in that fractal. About as close as we did today.

SPX

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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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


I’m Sorry to Be Like This, But We Could Crash

Earlier today, I already pointed out lots of things I don’t like here.

S&P futures, did, in fact end up rejecting that trend line discussed here. And I hope you can appreciate how ugly it looks, just in a general way. The May 20th low was an excellent candidate for a major low. But the drop we had from the bad inflation print caused that huge selloff and we lost that trend line. We tried to recapture it at the end of June, lost it again, and we’re trying to recapture it again now and so far we’ve failed.

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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


So Far So Good; Alternatives I See From Here Are Either: 1) Bearish, or 2) More Bearish

I don’t have a lot fundamentally to discuss this weekend. I will, however, run through a somewhat long list of technical features that I see on a variety of instruments.

It is still possible for the S&P 500 to have another leg up (discussed here) because the triangle did not break down and we began to take out some of the highs to our left (from this again), but, we perhaps did not take out enough of them, as the consolidation from 6/29 (orange ellipse pointed to below) is especially important. As it stands, the rally on Friday felt to me like short covering only, and we remain within “technical” bear market territory.

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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


Now We Cookin’

My expectations yesterday that we may only just be entering the heart of the move still look promising today. I was hoping to see a gap and go, and we sort of got that, but it’s not yet quite the kind of gap I want to see to announce the 3rd of the 3rd.

And so, it possible that today was yet another 1 and 2 (of subminuette [red] degree):

SPY

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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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.


So Far, So Good; Some Notes on the S&P 500 (And Relata)

So far, things seem to be going to plan. I will list a few observations that I can make so far.


The S&P 500

$SPY has broken out of the wedge I pointed out here:

SPY

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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 weeks or so), 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, patrons of any denomination (you get to pick the amount) will be able to read my weekend analyses, Tier 1 members ($20/mo.) get access to all of the articles I write, and Tier 2 members ($35/mo.) get access to those, plus counts on other instruments and my Discord chatroom.