ST trend: up
Yesterday we noted that the ST trend was up, as buyers managed to consolidate sideways after the huge up squeeze off FOMC. We also mentioned that "As long as ML is below price, bulls have the edge.". That turned out ot be true. The initial push higher off the RTH open was a bull trap, as price fell abruptly afterwards right into the all important ML test. ML held (helped by a SE triggered on TT at the exact lvl) and bulls stepped in with force and never looked back.
The o/n was again bull friendly. AMZN and AAPL earnings were very well received and pushed the market even higher going about 40 points above the RTH close (which was near the highs of the session). Then price pulled back in the same sideways move like yesterday. However this move had even more limited downside as we are hovering near the highs still. After the big up squeeze from yesterday (2nd day in a row) the same normal expectation sees price making a ML test. As long as ML holds, bulls can keep running higher. Once ML will fail that would be the indication that the main trend is shifting to downside, until then bulls are in control.
As market is gapping up, the reaction to the gap in the first 30m-1h will be important. It could be an exhaustion gap given the vertical move we saw since Wednesday or it could be a continuation gap which runs to squeeze the last remaining bears. Pay attention to the RTH open and reaction after it.
ST trend: neutral
Yesterday bears took control since the o/n after dropping price below ML. The entire o/n session price was capped by ML and then they pushed price below macro-ML into a nice flush towards 3920 lvl, overshooting it slightly. Bulls woke up then and after an unconfirmed low on FGSI managed to push back.
The o/n session was bull friendly this time around. Bulls managed to build on the late session bounce and won back both macro-ML and ML.However, after reacting the important 3970 area, they stalled and now price is back-testing ML again. ML is the key near term, if bulls manage to defend here, then the door for more upside is opened. If ML fails, macro-ML is last defense for bulls. Below that and flood gates open again with yesterday's LOD open to be retested.
Today is FOMC, so it's quite likely the market will chop around waiting for that before choosing a path. Reaction to MSFT and GOOGL earnings seems to be positive, despite the earnings miss. So that could be a sign that markets are ready to rally no matter how bad earnings or guidances are. Fireworks expected after FOMC at 2pm. With clearer direction to be set tomorrow/Friday.
ST trend: neutral (with potential larger topping pattern)
Yesterday we were noting that the ST trend was neutral, as buyers were inefficient via FGSI, having put in bearish EE vs the prior HOD, and price was testing ML once again. We did mention that ML was key for the trend and buyers managed to defend it initially bouncing to near the o/n high, but head-faked the breakout and droped below ML. That was a head-fake too, as it was then very quickly recovered and buyers pushed to new highs closing at the highs too.
The o/n saw us pullback from the new high and the pattern is a bit worrying for bulls. That squeeze high was unconfirmed on all 3 GSIs (FGSI, IGSI and MGSI). Additionally both FGSI and IGSI peaked at extreme optimism close to there. And both FGSI and IGSI have geo/fib ratios converging there. That means that yesterday's HOD is THE key level for bulls. They cannot affort to pause here, because if this pulls back it will look like a ST top from where a multi-day decline can start. ML is key, as always. As long as ML is defended, this can be just another "usual" pullback before running back higher. If yesterday's unconfirmed high is not reversed (i.e.bested and turned into a confirmed high) and ML is lost, then the larger topping pattern will be confirmed and bulls will want to be careful for a while.
EWT wise the wave counts align well with TTs. Yesterday's final push looked like an ending diagonal (ED). Which also makes that high the key overlap, just like shown by TTs. If ED, then the entire move off 3720 might be done and would need to be retraced at one of the usual Fibs (38,2%, 50% or 61,8%) before (potentially) resuming the up trend.
ST trend: neutral (pullback to ML expected)
Yesterday the market gapped up big then ran higher all day in an impressive show of strength from the bulls. In the o/n it coiled between macro-ML and ML, with bulls managing to hold macro-ML and once ML was won back there was no looking back. TTs helped with a 100% BE Xtick off the RTH open, which we warned in real time in the chat room that if broken out can lead to an up squeeze.
The o/n saw the usual pattern play out after such a strong up squeeze. Continuation into a new high, then pullback starting. The current pullback is expected to test ML. That is the normal expectation. After such a strong squeeze we might get a shallow pullback, just be aware of that option. As long as the ML back-test holds, bulls have the ball. If ML is lost, then macro-ML would be next target, so the coming ML test is a big inflection to watch carefully.
FGSI is showing buyers inefficient on the last bounce, so ML test is almost assured at this point. IGSI is below center line after falling from extreme optimism, while MGSI is coming lower from an unconfirmed high. So not all is rosy for bulls, making ML the key lvl which they must defend to get a shot at higher prices before a more significant pullback.
ST trend: neutral
Yesterday we noted that the ST trend was down with potential bottoming process ongoing, as ML rejected price but FGSI was showing an unconfirmed low already. That low was broken and we made lower lows, but FGSI refused to confirm that low also and buyers managed to find a footing there (near 3720). Atfter that they staged an impressive rally, which was initially rejected at ML, but then they managed to breakout.
The o/n was friendly to the buyers. they managed to push higher than the RTH close, touched macro-ML where price was rejected. The drop came into a ML test which held after the initial spike lower. Now price challenging macro-ML again. The buyers have a slight edge here as they managed to hold ML. FGSI has large swings both ways, so neutral. On the upside macro-ML is the lvl to beat for buyers. Sellers on the other hand need to sustain a breakdown below ML to potentially have a shot at retesting yesterday's lows. Mkt looks coiled between ML and macro-ML, gathering energy for a breakout/down.
Today is OPEX, so we might see large swings both ways to decay both sides. Just be prepared for that and don't leave a position unattended.
EWT wise, the triangle pattern was invalidated. I still think this is a large B wave, but regular zig-zag or WXY, as oppossed to the presumed (now invalidated) triangle. The pattern could sustain one more low near 3700 and still be a B wave. If that plays out, next path is a large C wave move higher to 4200-4300. If the lows at 3640ish are broken, then more immediately bearish. In any case, it looks like we are close to a resolution soon. Max 1-2 trading sessions and the new trend will emerge.
ST trend: neutral
On Friday we were noting that the ST trend was neutral as we had the normal pullback to ML after an up squeeze, but it was a bit too shallow. Sellers were inefficient on FGSI, but then also buyers showed the same with bearish EE vs the prior high. The market showed that it is undecided during the entire session as it fell quite dramatically after the NFP data, to take out ML, but win it back quickly and then it proceeded to take out the prior day highs after RTH open. Then another 2 whipsaws down to ML and up again near the highs to finish a chop shop.
Sunday and the o/n saw a continued decline and buyers lost ML and also took out Friday's lows. And while sellers have some reason to celebrate, the o/n low came near macro-ML and also put in an unconfirmed low on FGSI. That's concerning for sellers and unless they take out that low, that could indicate an important bottom. Price made it back to ML and it testing its underside, reaction here will be important. If buyers win back ML, then the o/n LOD is confirmed as an important turning point. If ML continues to reject price we could see a revisit of the o/n LOD. Buyers want to avoid a break of that level and of macro-ML to ensure that another leg down doesn't happen.
EWT brings a bit of clarity here, as Friday's highs were not "clean". Meaning the wave structure into those highs didn't look impulsive and it is presumed to be a b-wave high. That means that we should take out those highs before a potentially large decline happens. So this adds weight to FGSI's indication that the o/n LOD might be the low before a strong bounce. SPX cash trumps futures in EWT terms, so we'll have to see what RTH open brings. For not BTD seems to be the better R/R in the big picture. That being said, this is likely to be minor wave 4 of either a large B-wave or of the large C going up. And wave 4s and B waves are notorious for being very difficult to trade, with large and sudden swings both ways. So caution is warranted.
ST trend: neutral
The market threw in 2 "there and back again" moments as it took out Friday's high in the o/n session, only to give up all those gains and test last week's lows during the RTH session. There buyers found their footing again and rallied right back up to the highs again.
The o/n did little to resolve the situation as we had the usual push to minor new highs, then consolidation back to ML. So far ML is holding, but buyers are unable to move significantly past the highs. FGSI is also showing large swings both ways, so for now it seems the near term trend is up for grabs. ML and macro-ML are the main area and line in the sand. If these are lost, then sellers would take the lead and quite possibly take us lower than last week's lows. If ML and macro-ML are defended, then buyers could start to squeeze higher. Binary outcome so far.
In terms of the big picture, the EWT options also look binary. Either we are already in wave 3/C going (buyers would need to continue higher directly for that), or we just finished a complex correction wave b of 2/B and we should head lower in a minor c wave (or larger 2/B). Target for this would be 3700ish, so buyers need to step in here to avoid that.
Also a note on the new additions to FGSI and IGSI charts. Fib and geometric ratios have been added to these price charts and as can be seen they work quite well. Risk management is paramount for these though, so if playing the convergence of lvls, stops below that lvl are a must. They caught all significant highs/lows so far, so when they trigger it's definitely worth paying attention to.
ST trend: neutral (pullback to ML likely)
Yesterday we were noting that the ST trend was neutral as FGSI was showing that neither side was in control. Buyers had won ML, but were not able to put some distance to it and with bearish EE on FGSI, there was no clarity to the resume of the up trend. We also noted that "On the sellers' side, they want to break below ML and macro-ML. Yesterday's lows are the last resort defense for buyers, if those are broken, then we likely sell-off directly and could potentially see much lower lows". Sellers did manage to step in hard just prior to RTH open and once macro-ML was lost we sold directly to test the prior day lows. That is where sellers lost the battle. They tested those lows and came within half a point to break them, but failed. Buyers stepped in and launched a rocket never looking back and after winning back ML and macro-ML then proceeded to break the prior day highs. Truly impressive reversal from the edge of the cliff.
The o/n saw the usual pattern that follows an up squeeze set up on FGSI. Price moved sideways consolidating, then when FGSI flashed warning signals that buyers are inefficient, we saw a larger drop which is likely targeting a ML back-test. That is where things will get decided again. So on the downside ML and macro-ML are the lines to watch, while on the upside, buyers would need to win back danny and 400bar MA to signal a resume of the up trend.
As a side note: on the big picture view, as discussed extensively in the members chat room, the EWT and cycle turn dates suggest an important high is close. On EWT terms the current move off the 4070ish lows looks like 3 waves up so far. So the normal expectation is that the current retrace is wave 4, which will then be reversed to new highs. Wave 4 cannot overlap wave 1, so macro-ML becomes important also from an EWT point of view as it is very close to that high. After this 5 waves complete (if that plays out), the danger for buyers would increase exponentially as it is possible the entire rally off 3811 low is done and we could revisit those lows soon.
ST trend: up
On Friday we were noting that the o/n ST trend was up, however we did warn that "So for now things look bullish, however I still believe this could be a bull trap, caused by OPEX. Buyers have the edge now, but to confirm the change in trend they would need to sustain a breakout above macro-ML. That would also breakout the upper side of the bear flag. On the downside, sellers need to break down below ML. IF that happens, the danger to the buyers grows exponentially as I believe there is a real chance that we break yesterday's o/n low and potentially go much lower. So if ML is lost, buyers need to be VERY careful.". Buyers weren't able to break above macro-ML and the upper side of the bear flag and we dropped in the "usual" slow grind lower manner until the last 2.5h of the RTH session. The market did break the lows from the prior weak and went about 45 points lower, before finding a bottom. The huge short squeeze in the last 2.5h could be also an OPEX squeeze, as many big names were oversold and the max pain price was higher than where it was then.
Sunday and today saw the market continue the bounce started late on Friday, however it stalled and chopped between macro-ML and ML. Where price goes from here will be important. Same as Friday, this bounce could be only an OPEX short squeeze from Market Makers and now that options expired, we will see if there are genuine buyers here or not, once RTH opens. It is a bit of a coin toss here, I still suspect that this is bull trap though. If buyers can break the o/n highs and sustain a breakout above macro-ML, then we could see a multi-day bounce. However if ML is lost then we could erase the entire late Friday ramp. Compression between the 2 MLs for now, the breakout/down will be large.
ST trend: down
Yesterday the sellers showed the true nature of this market as they dropped SPX a whooping 4% and we had a gap 'n go with relentless selling all day. As I have shared in the members' chat room, I have been bearish on these bounces and I think what was published in the daily update 2 days ago pretty much sums it up:
"the target for this bounce is 4080-4100. That zone was reached already, but because of the shape of the waves, I do not think it's complete. I would expect a pullback here to solve the overbought status, then another push higher towards the upper end of the target zone before a larger drop occurs. Just to mention - if my read is correct, it is possible that once this push higher completes, the market can drop below last week's lows. So this is not the place to chase higher for the last 20-30 points, as downside potential is 10x that."
Well, we did get close to 4100 in the AH sessions on Tuesday and early on Wed, before we dropped to last weeks' low today in the am. So that call was eerly accurate.
The question now becomes: what now. Immediate term, buyers are trying to bounce off an unconfirmed low on FGSI and IGSI, while MGSI almost made it to extreme pessimism. Which does put that low as a potential important ST low. Buyers would need to defend those lows for dear life to avoid another repeat of yesterday and potentially a capitulatory crash. On the upside, buyers need to sustain a breakout above 400bar MA and danny and attempt to win back ML. If ML is won back (big IF), then that would aleviate the pressure from the buyers and potentially start a larger short squeeze.
In the bigger picture, the market is in a very fragile state. We dropped a lot and trapped a lot of buyers which jumped in on Monday-Tuesday happily proclaiming the dip is done. Regardless of the immediate term moves, the correction is likely still not done as we didn't see yet the type of capitulation needed before such a move finishes. I am looking for VIX >40 and SPX somewhere in the 3600 area, possibly lower, as targets. So any bounces should be viewed as counter-trend. If buyers win back ML in a sustained way, then that would need to be re-assessed.
ST trend: neutral
On Friday we were noting that the ST trend was up as buyers had rallied off unconfirmed lows and won back ML, while sellers were very inefficient on pull-backs. We did mention that while the low looked unresolved (3 waves in EWT terminology), the key lvl to break for sellers was ML. They were unable to do that, despite 2 additional attempts and buyers kept the trend intact, also pushing above macro-ML.
Sunday saw new highs being reached, which stayed unconfirmed and had a pretty large pullback (60 points) all the way into another ML back-test. It held again, however so far buyers were unable to push back towards the highs and price keeps hovering in ML vicinity. So for the moment, the trend looks to be up for grabs, neither side being in complete control. FGSI is also showing that both sides are inefficient. ML remains the key lvl to watch, as long as it is below price that should keep buyers afloat.
ST trend: down (with bottoming attempt)
Yesterday we were noting that the ST trend was up as buyers had regained ML and sellers were inefficient on the pullbacks. We did mention that CPI release is "likely to cause some spikes and finally give the direction for at least the 1st part of the day. Overall the market remains weak as any bounce, even large ones, continue to get sold hard. Buyers need to break resistance, then start holding supports on pullbacks to reverse the big trend. Otherwise any bounces are sells.". That played out exactly. The CPI release caused a massive drop erasing all the gains buyers managed to build. The it stopped at the 3950 support lvl and staged an impressive bounce into the 1st hours of the RTH open. After that buyers failed to hold ML and we sold off to new lows.
The o/n continued the bearish character and dropped to lower lows. Buyers are attempting to stick save 3900 and FGSI stubbornly refused to confirm the lows. We now have 3 consecutive unconfirmed lows on FGSI as well as an unconfirmed low on IGSI. So there is at least a bottoming attempt ongoing. Buyers must defend those lows and break the 1st bearish EE lvl to confirm at least a ST low is in. Otherwise the unconfirmed lows set-up can get broken and we continue to sell off.
As a side note - it looks like markets are gripped by extreme fear. It is likely we are going to need a capitulatory action before we find a more meaningful low. As repeated for weeks already, the intermediate target for this down move is, in my opinion, in the 3600 range. That's not even that far anymore as it's "only" 300 points from where we are. Considering that we already dropped from 4600 at the end of March and the brutal sell-off in many stocks, this is likely the initial stage of a bear market. We should get a larger bounce after this capitulatory low, but new ATHs are unlikely to happen for a very long time.