Looking Ahead: Some Short-term Positive Potential but More Lows Probable

After yesterdays large range day, last night's market structure had options. From appearance, a low would be expected into 6:00 AM from a 4:00 AM overnight high. If probable 6:00 AM-ish reaction occurs then the reaction should extend into around 1:00 PM and most likely be upward biased. Selling from 1:00 PM into the close could be dramatic as targets to 2040 and 2018 SPX cash are lurking on our Level's Tools studies. As always, note this data is for educational purposes only and also timing is an estimated window.

Usually, we like timing to be within 30 to 45 minutes but often can extend somewhat more, yet when reviewing the day, it's obvious that it was correct and appropriate. In or near timing windows, generally good idea to keep attention.

It is interesting that daily market structure projection probabilities suggest today's AM session to tomorrow's AM session favors some upward bias. Note, Monday's Daily AM session to Tuesday's AM Session probabilities favored negative bias as discussed last week and have been fulfilled.

June 30th, 2015 Intraday Market Structure Projections

EURO Broken, Breaking and Broke – Greece Plays Its Hand

EURO Broken, Breaking and  Broke

EURO Broken, Breaking, and Broke

The ECB thought they could back the Greek Government and leadership into a corner with no other choice than an insipid self-destruction that would have left them, culpable, maligned and threatened by their own nation. Soon to be replaced by a trinket government installed at the whim of a few EURO bureaucrats (or Neo-Nazis - take your pick).

Greece played it about as well as possible. Knowing that the objective of ECB and Germany was to make sure that no other political administration in the crumbling European Union would ever be willing to commit such an act of defiance and humiliation against central planners. They waited till after markets had closed to announce a referendum and to "stick the finger" to the central planners (see ECB & EU Strategy – Political, Not Practical). During the afternoon on Friday, Greece made overtures but just after the close of the markets they gave no wriggle room to a central bank that thought it owned the outcome of the situation.

This era, characterized by the senseless debt pumping by central planning bureaucrats all over the world, has destroyed many lives and is presently in the process of destroying millions more - which will inevitably be the driving force of more complex conflicts between nations. The fact is that, via side deals and convoluted transactions with the US FED, virtually all sovereign central banks operate US FED policy by proxy. Almost all of them are precariously close to losing control of the leverage they have been so desperate to pretend is a catalyst to growth when in fact it is clearly the opposite (see these charts). IMF and BIS have been projecting wild fantasies regarding Greek growth for years. As it appears, these delusions are influenced by blind deference to the concept that something can be created out of nothing by a few bankers with a "control-P" key. Sadly this is not the situation as so clearly shown in IMAGINARY NUMBERS. With so little real capital available and so much leverage, even a little disruption can have grave implications. The next months and weeks will likely reveal more regarding leverage (more accurately deleveraging) implications.

Leverage - Where are we now?

Leverage - Where are we now?

These crises arising all over the world may be a catharsis for people in the end, but it will be one of the most painful paths possible for rejuvenation. From this perspective, Greece knows they are in pain, it can not get much more intense for them. What you can not pay for does not get paid - so, there is somewhat of a limit. BUT IT CAN GET VERY PAINFUL for debt-pushing central-planners. The implications of huge and contagious CDS & derivatives losses, financial instability and challenges that are all pointed at the feet and minds of central planners (as opposed to indebted governments) is likely to be a trend.

If there is one lesson from Greece, it is while the drug is offered - take it. When the drug causes ill health and death, for the history books, make sure its manufacturers and pushers get the blame. 

Monday Projections & Intraday Comments

It's possible that markets can get super bearish immediately. However, this outcome seems like it may take a week or so to setup. In the mean time from a practical perspective, the central banks will be all over the major markets as they begin their umteenth panic that they have caused, enabled and precipitated. It will get MUCH WORSE. However, directly ahead looks to be quite a lot of volatility to torture everyone...or reward the nimble and not greedy. Today is from a probabilities perspective the weakest bias day on a flow basis as mentioned a few times last week. There was some precarious potential for some up bias into the Monday open. This easily could have been precipitated by the market reading a positive Greek outcome versus a negative one. That did not come to pass, and the normal probabilities played out. Recently, Monday projections have had the character of being the weakest close to close (Friday close to Monday close) and also the weakest day (cash) session tendency as well. Expected was a 5 AM high. If this high is not bettered by roughly the 9 AM to 10 AM timing, then probability skew could be for the most bearish outcome today - shown in RED.

June 29th, 2015 Intraday Market Structure Projections

June 29th, 2015 Intraday Market Structure Projections

A Look at the Longer-Term Market Structure Projection

Below is the updated longer-term market structure projection chart. I have explained many times that all this work is NOT AIMED at implying the scale of movements in the markets but rather direction for each period to the next period being handicapped/analysed. Therefore, it's of NO significant relevance if a high shown via the magenta line, is a higher high or a low is a lower low. The implication is simply the probability based bias for the direction one week to the next. So, for example, a sequence of two down weeks implies two weeks of down +/- a few days to a week.

So, what is to be gleaned from this? Well, as can be seen from the Magenta MSP, momentum and directional shifts week to week are projected into the future highly presciently. The objective not to be perfect but to be able to make educated assumptions regarding directional risk and progression +/- a week or so.

Longer-Term Market Structure Projection

Longer-Term Market Structure Projection

Below is a further outlook. The above chart shows more history so as to be able to observe previous behavior of the MSP toolset. The chart below takes further look into the future and it does look largely biased toward downward directions. Remember what is shown on this chart can look like a small down or up move but in reality be a huge one. The precedence of directional probability is much more important and the timing of such. For scaling of moves and their potentials other tools are preferable.

Longer-Term Market Structure Projection into September

Longer-Term Market Structure Projection into September

Today – Live versus Memorex Projection Analysis

Not much commentary needed. DOW was much more orderly than the SPX but both complied with structure and timing. Additionally, e-Tick-Tools real-time emotion analysis had a terrific day today. Daily AM session to AM session directionality remains precariously up into Monday morning. Monday. however, has a tendency to be a very weak day session day currently - selling from a morning high remains probable. Should be an interesting week next week.

June 26th, 2015 Intraday Market Structure Projection Reconcilliation

June 26th, 2015 Intraday Market Structure Projection Reconcilliation

Reversion…MSP Suggests Edge for Immediate Weakness Fading

Some cross currents. For the record: today can get pronounced weakness as bias is significant toward downward propensity. However, yesterday's outperformance down at the end of the day and the overnight market structure shifted probabilities for a reversion - CYAN market structure projection on chart below. Consolidation or choppy bounce is favored.

Weekly MSP turns down next week and that likely increases the downward propensity of markets as a whole. However, today AM into Monday AM support some up bias. Of course, my approach in this type of situation is to watch the larger timing windows very carefully for modal decisions. Strength into 10 AM significantly improves odds for strength into Monday AM and some positive progress today. If 5 to 6 AM highs remain "high-of-day" or 4:00 AM lows are broken - this is a MAJOR issue for market and can dramatically increase impending downside probabilities. 

Normally, the projection for a 5 AM high would be the simple high odds outcome as discussed yesterday. However, some cross currents developed overnight.

June 26th, 2015 Intraday Market Structure Projections

June 26th, 2015 Intraday Market Structure Projections

Probability Shift

Currently, nothing has changed regarding today's timing. However, the specifics of today's biasing probability has shifted and it currently could affect the outcome. It appears that either today's bias could be shifting especially negative or towards the only moderately positive potential outcome for the day. Overnight indications could be leaning towards this outcome currently, to confirm probabilities slightly more time and data is needed. So, around 5 AM should be sufficient. Will post details as needed.

Market Structure Projections – Wrap Up

Here is how today's MSP stacked up against the real markets. Extremely close timing and all available way before it markets actually traded.

June 25-26th, 2015 Intraday Market Structure Projection Wrap-up

June 25-26th, 2015 Intraday Market Structure Projection Wrap-up

Edges Update & a Look Ahead to Friday

This is an update of the previous post and since things could get interesting - into Friday. Comments are on chart will add comments on blog as necessary. So far, 7:30 AM high has been met and probabilities have increased for downward bias into the day session. Also, DAILY MSP from today's AM session to tomorrow's favors a down bias. However, keep in mind that this Friday's day session has a strong predisposition for weakness.

Please note, timing windows are +/- 30-minutes to an hour. [1:30PM edit: 2:00 pm to 3:00 pm is extent of consolidation timing from 12:00 pm window...and does support weakness into the close]

June 25-26th, 2015 Intraday Market Structure Projections

June 25-26th, 2015 Intraday Market Structure Projections

Today’s Edges

Below is today's MSP (Market Structure Projection). Bi-modal at 7:00 to 7:30 AM - so direction out of this window is likely to have a significant impact today. Daily momentum for the week peaked yesterday, and the normal tendency for Thursday is less strong than Wednesday. Bias for Thursday is moderately positive. Daily Market Structure Projections from yesterday's AM session to today's AM session are moderately positive. Keep in mind that this could imply Prices above 2111 ES futures.

Early clues that could increase probability for downward movement into 12:00 PM would be a 4:00 AM high. IF the markets make a 4:00 AM high that is rejected directly and not retested at 7:00 to 7:30 AM, then probabilities are high for a down biased day. So, again 7:30 AM area is the switch today.

Coming to the end of the week, probabilities and tendency are rather weak on Friday as mentioned several times recently.

June 25th, 2015 Intraday Market Structure Projections

June 25th, 2015 Intraday Market Structure Projections