mcm-Alex

mcm daily market update 7.Jul.21

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ST trend: up

Yesterday we were noting that the ST trend was neutral, but the set up was there for a bigger correction. ML did give way and we did get a decent decline, until the market found a bottom at an unconfirmed low on FGSI (alerted in real time in the mcm chat room). Buyers stepped in strongly there and after breaking an important emotional area with 3 exhaustions (2 BEs and 1 SE), they pushed price directly to ML and broke back above.

The o/n saw a bit of consolidation after the big bounce off yesterday's LOD and for a while the trend was neutral, as both sides were inefficient via FGSI and we had both bullish and bearish EE setting up. However it was again buyers who took the lead, they held the bullish EE and broke through the initial bearish EE level. ML continues to move higher (pushed by price) and is the key for the trend. As long as buyers can keep price above, the trend is (back to) up. Losing ML would be a serious warning that we might get another attempt at more downside, but at the moment yesterday's LOD looks like the end of the near-term correction.

mcm-Alex

mcm daily market update 06.Jul.21

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ST trend: neutral (with bigger correction potential)

On Friday we were noting that the trend was still up, as ML continued to hold and FGSI continued to paint confirmed highs. That pointed to the usual upward bias going into a long w/e will play out and indeed it has, with the market finishing with a new ATH.

However the up squeeze from the 2nd part of the cash session triggered a bearish pattern in FGSI, namely a 45 degree angle divergence. When these large divergences between FGSI and price happen, they are normally bearish as they indicate determined selling so basically distribution as the price goes up. This type of pattern was followed text-book until now, as price retested the divergent high and was rejected there. Now buyers look inefficient via FGSI. We also have additional warning signs. On the retest of the high (which actually made a minor new high), we had large unconfirmed highs on IGSI, MGSI and also FGSI showed an unconfirmed local high. All pointing to the POTENTIAL for a bigger turn. ML is being tested now and as usual, it is the key for the near term trend. If sellers break below ML, that would be a big warning that the 45 degree angle divergence on FGSI is indeed playing out (pointing to a larger decline). Buyers would need to best the o/n highs and run a bit further to cancel the bearish potential. Right now this looks like lower odds though.

mcm-Alex

mcm daily market update 18.Jun.21

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ST trend: down, with potential bounce attempt

Yesterday we were noting that the ST trend was neutral as both sides were inefficient, as shown by FGSI (something which is happening quite often in the o/n as of late). The market had a big pop prior to the open, then a few whipsaws before finally dropping hard to retest Wednesday's lows before rallying hard into the close and retest the highs of the day.

The o/n now saw the market moving sideways and then starting to drift lower. FGSI is showing extreme pessimism already, so a bounce might be attempted, but it it also showing confirmed local lows, so the decline might extend. We have a bullish EE lvl vs yesterday's LOD, so that levels becomes important if we do in fact accelerate lower. The biggest problem for buyers is the fact that they lost ML, then tried to win it back but failed.

mcm-Alex

mcm daily market update 16.Jun.21

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ST trend: neutral

Yesterday we were noting that the trend was up, but with a potential reversal pattern, as all GSIs were showing unconfirmed highs at the o/n high. That did prove to be a bad omen for buyers and the market proceeded to then retrace the entire rocket launch move from Monday's last 2 hours cash session.

At LOD we did get an unconfirmed low on FGSI and market tried to bounce, but this time the bounce failed to get above ML, which is a clear indication that the buyers are losing control of the ST trend.

In the o/n session we had only a sideways movement with whipsaws in a tight range. FGSI is showing that both buyers and sellers are inefficient, as small price movements trigger big swings in FGSI. One thing that gives the sellers an edge is ML and the fact that it rejected price action yesterday but also in the o/n. ML continues to be the key for the near term trend, so if buyers want to stage a bigger bounce from here they must break above ML. Today is the conculsion of the FED 2 day meeting, so prices might stall and continue to sideways chop from the o/n until after the FED announcement and then stage a larger move.

mcm-Alex

Lessons learned part 3

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Last week we had fireworks again, with the first 3 days being very bearish, while Thu-Fri provided a vertical V-shape rebound, with up gaps on the cash sessions on both days.

There were quite a lot of great tells from the mcm tools, so let's dive right into the "lessons learned".

  1. IGSI unconfirmed low set-up

Unconfirmed lows on IGSI are very powerful set-ups and are normally good for a lot of points. A great example is the actual move off the Thursday morning low, which was unconfirmed on IGSI. However we actually had 2 unconfirmed lows set-ups, the first of which failed. Let's see the main differences between the two.

On Tuesday we had an unconfirmed low on IGSI, but the initial bounce off that low triggered bearish EE which held and pushed price lower. The unconfirmed low was held initially, but the bounce off there triggered again a bearish EE which also held. The next trip lower broke decisively the unconfirmed low and the market flushed.

On Thursday we again had an unconfirmed low on IGSI, but this time, buyers never hesitated and rocketed off there.

The main take-away is that the confirmation lvl for the upside set-up of the unconfirmed low on IGSI is the peak of the prior IGSI high before the unconfirmed low. If IGSI shows bearish EE vs that lvl, it is best to be cautious and raise stops on positions entered at the unconfirmed low.

2. FGSI up squeeze set-up

Normally when FGSI is at extreme optimism (red zone) it indicates a top and reversal is close. However the "up squeeze" set up happens when FGSI is in the red zone and starts pulling back, while price keeps hovering near the highs or even makes new highs. That indicates that market participants are increasingly pessimistic, but are unable to move prices lower. Ideally this sort of set up is completed by a breakout on Tick Tools (TT), like a breakout over a buyer exhaustion (BE) or an important level, like the maginot line (ML).

We had also 2 up squeeze set ups on FGSI last week, one failing and one playing out well.

The 1st one occured on Thursday. After the big bounce off the unconfirmed low on both FGSI and IGSI, FGSI reached extreme optimism (red zone). But price continued higher, as FGSI started to come lower from there. On TT we had broken out a BE just after the cash open and everything was looking good for the up squeeze set-up. TT even triggered a Seller exhaustion (SE) above the broken BE, but the big warning came immediately after that when a new BE was triggered. That turned out to mark the high for the day and the market retreated quite strongly from that level.

The 2nd one occured on Friday and this time there was no stopping the buying stampede. We had almost the exact set-up. FGSI moved to the red zone, then started pulling back, while price kept climbing. TT had broken a very strong 100% BE Xtick and held the back-test. Then came a SE above the broken BE Xtick (so far exactly like the set-up from Thursday), but this time no BE triggered and the coast was clear for buyers to continue higher. This is exactly what happened as price grinding higher for almost the entire session, with only the last 1h sesing a few whipsaws both down and up, and closed near the highs of the day.

The main take-aways is - the up squeeze on FGSI is a powerful set-up, but must be completed with signals from TT. If a BE hits that caps price and then a SE gets broken, those are strong signals the buyers are not in control any more. If TT signals that the up trend has little resistance, then the up grind can continue unabated for quite a bit. As can be seen, an additional confirmation on Friday was that price held the danny line all the way until the last 1h whipsaw. That is indicative of a strong up trend.

mcm-Alex

mcm daily market update 5.Mar.21

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ST trend: neutral (with bearish risk)

It seems the market stopped tipping its hand in the o/n session and keeps things in suspense until the cash market open. For several days we were noting that the trend was neutral as both sides were showing inefficiency via FGSI in the o/n session. Yesterday the buyers staged an attack over ML to get us back to an uptrend, but failed just above as the markets were disappointed by Powel's remarks. Funny how that works. So just to mention this again: ML is a KEY level for the overall trend. If price is above, we have a bullish bias, while if price is below - bearish.

In the o/n, both buyers and sellers were inefficient, as the market still tries to digest the mini-crash off Powel's statements. We have bearish EE above which held price action and pushed it lower and now bullish EE set up with FGSI bouncing from extreme pessimism. Those levels remain important and a breach would mean one side is getting the upper hand. Buyers want to hold the bullish EE and ideally to break back above ML. That would help them and could trigger a "relief rally". Sellers want to make a stand at (or below) ML and try to attack yesterday's LOD. Breaking the bullish EE level would help them significantly.

mcm-Alex

mcm daily market update 10.Feb.21

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ST trend: up with reversal risk

Last 2 days we had an apparent neutral trend in the o/n, with both buyers and sellers showing inefficiency in terms of ability to move price. And in both days it was the buyers that took the lead (back). Today, the trend is up, with sellers being inefficient, however we did have an unconfirmed high at the o/n HOD which could mark a ST reversal. The key word is "could" as for that to happen, the sellers would need to show up and push this lower. If buyers break that level and turn it into a confirmed high, then the up trend will resume.

mcm-Alex

mcm daily market update 09.Feb.21

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ST trend: neutral

Yesterday we also noted that the trend was neutral, because after a prolonged up trend, FGSI was showing that both buyers and sellers were inefficient. We had bullish excess energy (EE) triggering on declines and and bearish EE triggering on bounces. However it was the buyers who took the lead again by breaking the bearish EE level. They also defended the 3886 ES level, which was the breakout of Buyer Exhaustion (BE) Xtick and the Maginot Line (ML) level.

Today FGSI is showing almost the same set-up like yesterday. Sellers are very inefficient, triggering bullish EE on each decline. However also buyers are showing inefficiency on bounces. So the 1st signs of one side taking the lead would be when they manage to break through an oppossing EE and make confirmed lows/highs.

mcm-Alex

mcm daily market update 04.feb.21

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ST trend: up

After the weakness into the close, mkt continued lower, but put in a very bullish situation at the o/n lows. Not only there was extreme pessimism on FGSI, but it was in the context of bullish excess energy (EE) vs the prior trip to extreme pessimism. Additionally it put in an unconfirmed low just after that. Not suprisingly that triggered a decent bounce. That did trigger bearish EE which initially held, but was afterwards bought to new highs and the bearish EE level was broken and turned into confirmed highs. That also has the potential to be very bullish. Sellers are also inefficient on this decline and a bullish EE is already set up vs the prior low. These are all bullish signs, so the ST trend is up. The only way bears would be able to reverse this into a more immediate correction would be to break that bullish EE level, however with the maginot line (ML) also being a few points above it, that looks unlikely.