MCM Newsletter – Outlook for Week 1 – 5 Feb

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): neutral/down
Short-Term Trend (60min&135min): up

Details:
The weekly cycles are still just oscillating, however there has been a significant development this week, in that both ES and YM triggered support levels (highlighted on the chart). This means that although the trend is still neutral, the normal expectation shifted from down movement to up, until a new resistance level is triggered. If the market starts heading lower before a resistance level is triggered, the support levels (1804 ES and 15364 YM) are very important to watch, since breaking them would start an impulse down.

Weekly Cycles

Weekly Cycles

On the daily cycles, YM broke its support level and confirmed the down impulse. As mentioned last week, YM could unwind the impulse in a similar manner to last impulse. The market bounced quite strongly from the lows and therefore we are coming in an area in which the appearance of a bearish retrace (BR) would be quite possible. ES broke it’s support level initially, but manged to recover and bounce back over it. Therefore the next level triggered should be a 3rd END resistance, pointing in the same direction as the (potential) BR on YM. For early clues as to where these resistances might trigger we will have to watch the shorter time frame cycles.

Daily Cycles

Daily Cycles

The 60 and 135min cycles oscillated for a while after completely unwinding the down impulses with a 3rd END. Currently both confirmed up impulses, while 60min also had a capitulation bar (red bar on the chart) at the top on Friday. Although that is a serious warning for bears, once an impulse is confirmed it usually back-tests the break-out level before really taking off. In the current context, this back-test becomes very important going forward. If the market manages to hold those levels (1903.25 and 1896.5) then more upside is likely before the up impulse will start to unwind. If the up impulse is reversed, with the price moving below the break-out levels, then the reaction to the next triggered support level will be key.

60&135min Cycles

60&135min Cycles

mcm “MSP, Market Cycles, eTickTools & Trade Modality/Allocation” Webinar Scheduled & Attendance Information

We have scheduled part 1 of the "mcm MSP, Market Cycles, eTickTools & Trade Modality/Allocation Webinar". This will be a 45 minute to 60 minute general Q & A and overview. We are especially looking forward to learning from your questions that we can address in detailed fashion in a follow-up webinar for Sunday @ 5 PM EST for Part 2.

We look forward to seeing you there.

Waves - mcm Webinar

mcm Webinar - impulse waves/cycles, eTickTools, mcm-Indexes, MSP and Trade Discussion for Volatile Markets

 

Log-in URL:

Registration Form URL:

Dial-in Number:

Attendee PIN:

Meeting ID:

https://www.anymeeting.com/443-563-506

http://www.anymeeting.com/PIID=EC53D780824839

323-920-0091

517 6159#

4381270

mcm “MSP, Market Cycles, eTickTools & Trade Modality/Allocation” Webinar Scheduling/Poll & Invitation

Applied Cycle, eMotional Impulses, MSP

Applied Cycle, eMotional Impulses, MSP

We have wanted to do a follow-up webinar to our previous discussion for quite some time but scheduling always seems to be an issue so we are once more putting the Webinar scheduling and attendance to a vote. The amount of interest and the state of the markets leads us feel that further discussion and Q&A for the benefit traders.

The webinar/online meeting will be free and will be an interactive Q&A format when it is scheduled. We are seeking to get a near-term slot assigned that is convenient to as many people including ourselves as possible. We feel that there is a benefit on getting this scheduled as soon as possible.

Below is a vote. Please choose the times that work best for you and supply your email address and we will update you on the final scheduling of the webinar. Note all the times are quoted in Eastern Standard Time (New York) Also, note you can become  a registered user for our site and vote which will make it easier to sign up for the event once it is scheduled.  Registration is free.


This poll is closed!
Poll activity:
Start date 29-01-2016 02:04:31
End date 02-02-2016 02:04:07

Poll Results:

Scheduling options for the "mcm Cycles Impulses, eTickTools, MSP and Trade Allocation", when would be your preferred timing?


 

Using the mcm-CCI on RSI Cycles part 1

The mcm-CCI addition to the RSI Cycles turned an already useful tool into something so powerful that it quickly became my main reference for intra-day trading. I have seen it signal intra-day bottoms and tops, including the intermediate term bottom from the 20th of January. I am sure lots of people were reluctant to buy that bottom, myself included. But this tool proved its worth once more and proved my reluctance wrong.

Before going into examples to point out how the tool is working, please read the previous articles published on this subject for basic info on cycle behavior, RSI cycles and the mcm-CCI:

Now that the basics have been covered, we will focus in this article on one of my favorite ways to use mcm-CCI: anticipating the change of intra-day trends. There are 2 ways in which mcm-CCI on RSI cycles is doing that:
1. mcm-CCI is getting close to an extreme value: either close to +300 or close to -400.
2. a divergence between mcm-CCI and market price is occurring (eg: price is making lower lows, but mcm-CCI is making higher lows).
Here are several examples, with explanations attached.
1. mcm-CCI extreme value

RSI Cycles with mcm-CCI

mcm-CCI 1st example

At point 1, mcm-CCI was getting close to +300. At the same time, the RSI bars were showing an overbought condition (red bars). Shortly after the high, the directionality tool (white lines) tripped over and headed lower. At point 2 the previous impulse up of the RSI cycles was reversed, as the price broke below a support level (the bullish retrace, BR, cyan line). The mcm-CCI confirmed the move lower, by moving in the same direction. At point 3, the mcm-CCI broke below the 0 line, confirming the bearish character of the market. Afterwards the mcm-CCI didn't start to diverge from price and the impulse down unwinded in a near perfect faction, by moving side-ways and getting a 1st, 2nd and a 3rd END.

2. mcm-CCI divergence & test of 0

mcm-CCI 2nd example

mcm-CCI 2nd example

At point 1 and 2, we can see a slight divergence between market price and mcm-CCI. At point 1 both made highs, with mcm-CCI getting close to the extreme value of +300. At point 2, market price made a higher high, but the mcm-CCI did not. Although the lower high was not significantly lower, combined with the  overbought bar on RSI cycles and the resistance level and the directionality tool going to 0, there were enough clues that a change of direction is coming. Which happened and the RSI cycles started an impulse down by breaking the support (cyan line) level which followed. At point 3 we see another interesting signal from mcm-CCI. Namely - a test of 0. The RSI cycles bars were getting oversold this time and mcm-CCI tested 0 (coming from higher) and held. That is bullish and the market complied, bouncing higher. At point 4 and 5 we had yet another divergence between mcm-CCI and market price. Same scenario as before - market price makes a high, mcm-CCI makes a high (at point 4). Then at point 5 the market makes a higher high, but mcm-CCI makes a lower high, this time more significant than at points 1 and 2. RSI cycles break into a down impulse afterwards (break of the following support level - cyan line). At point 6 mcm-CCI fails the coming test of 0 and confirms more bearish implications, which quickly materialize with the market breaking down even further.

3. mcm-CCI divergence at the low on Jan 20th

mcm-CCI 3rd example

mcm-CCI 3rd example

As a last example of this 1st part, I will show what happened at the low this week. On 20th of January, right at the lows, when everyone was leaning bearish and didn't know how far the market would break, the mcm-CCI on RSI cycles signaled the turn. The same divergence showed in the above examples appeared and also in a significant manner - more than 100 points mcm-CCI divergence between the low at point 1 and the higher low at point 2, where the market made a lower low in terms of price. As soon as a support level (cyan line) appeared and held on RSI cycles, the change in trend started to take shape. At point 3 we had another great coming together of signals - overbought bars on RSI cycles, combined with a resistance level (magenta line) and mcm-CCI testing 0. That triggered a retrace, but which was held by the next support level triggered. At point 4, the RSI cycles broke into an up impulse and mcm-CCI also broke above the 0 line, confirming the more bullish tendency.

MCM Newsletter – Outlook for Week 25 – 29 Jan

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): down
Short-Term Trend (60min&135min): neutral/up

The weekly cycles are still just oscillating. The market moved significantly lower from resistances (sitting at 2110.5 ES and 17907 YM) and found a bottom in the area we were mentioning last week (highlighted on the chart), which held also on the previous 2 occasions. If the market holds up also this week, a support level might trigger which will then become an important level to watch if (or when) the downside resume.

Weekly 24.01.

Weekly Cycles

On the daily cycles, we were mentioning that YM broke its support level and confirmed the down impulse. Since it has moved significantly lower from there, YM could unwind the impulse in a similar manner to last impulse (highlighted at point 1 on the chart). If the market continues to bounce, the appearance of a bearish retrace (BR) level would be a warning sign that the bounce might be over. ES also broke below its support level (point 2 on the chart), however managed to rally back above it before confirming it (via the move of the mcm-MA below the broken support). If the market continues to move higher, we could get another resistance level (magenta line) trigger, from which we would expect the market to move lower until another support is triggered.

Daily Cycles

Daily Cycles

The 60 and 135min cycles show the context in which the actual low was put in last week. Previously both cycles had nested down impulses, the last of which fully unwinded with a 3rd END (can still be seen on 135min). Since that moment both were oscillating, while at the actual low, the 60min broke into another impulse down, but which was not confirmed also on 135min (point 1 on the chart). The attempted impulse down on 135min was reversed on the next bar after break-down and we can see at point 2 that after recuperating the level, it held the back-test. Towards the end of the week, the tables had turned and currently both are attempting impulses up (point 3 on the chart). 135min impulse up is confirmed, with 60min surely to follow in the absence of a rather direct drop below the break-out level (sitting at 1867.75 ES). These up impulses are a serious warning for bears, until the impulse is either reversed (still possible at this point) or unwinded.

60&135min Cycles

60&135min Cycles

Critically Important Support at S&P500 1842 – Below Is A Thinzone

We apologize for limited amount of recent articles published on the site. We have been very active in managing, analyzing and examining detailed market activity in the lounge and also sharing via other forums directly with people we care about. At this juncture, the post from last week which showed the 1840 area as key support has now come into play right in the MSP projection timing area. An inflection point is building and should shortly trigger.

However, it must be stated that the failure to liquidate for the extended periods from 2012 to 2015 sets up a severe potential for volatility greater than the volatility we have seen so far. In this analyst opinion, near-term would be something like a capitulatory type of volatility that would likely lead to a short-term reversal. However, volatility is likely to remain elevated as leverage remains under severe stress and overall account equity has continued to drop.

Note that if liquidation occurs today (or tomorrow) as many commodity centered hedge funds, futures managers and investment firms are likely being taken out in body bags, this liquidation will certainly not remain concentrated in the commodity space.

Oil is interestingly putting in a significant low presently according to MSP which is looking for a significant and potentially somewhat extended rally, as a result of this week's inflection point. Initially, it would be believed that equity markets will consider any recovery of oil prices to be positive and therefore, will correlate. However, it is highly likely. After about two and half weeks or so while oil continues to rally the equity markets will likely no longer correlate with that rally and liquidation phase will continue more focused on traditional risk assets into March in what hopefully will be a more lasting low.

Please be especially concerned with the level shown on the charts below. It is this analysts hope that we remain above the 1680 level by 30 to 40 points, and that enough emotional energy is released and leveraged reduced that some short-term recovery can take hold. Ideally, a recovery rally would look like something extremely strong as capitulated. Long's become shorts and are once again trapped. We ideally would look for return to the 1922 1950 area on such rally into early February.

S&P500 Cash Index Levels Chart

S&P500 Cash Index Levels Chart the failure to liquidate

MCM Newsletter – Outlook for Week 18 – 22 Jan

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): down
Short-Term Trend (60min&135min): neutral

Details:
The weekly cycles are still just oscillating. Resistances (sitting at 2110.5 ES and 17907 YM) held and triggered a strong down movement. The normal expectation played out and the market headed lower. What is interesting is that price is now testing an area which on 2 previous occasions provided a strong support and helped the market bounce significantly (highlighted on the chart). The same could happen also now, precisely at a time in which more and more people are getting bearish.

Weekly Cycles

Weekly Cycles

On the daily cycles, we were mentioning that YM broke its support level. Since then the impulse down was also confirmed, the mcm-MA moving also below the break-down level. ES also triggered a support level this week and this also failed to contain the market decline, being whipsawed in the last 3 trading sessions. The impulse down is still a long way from confirming though and the support could still hold if the market bounces next week.

Daily Cycles

Daily Cycles

The 60 and 135min cycles show the same picture as the weekly and the daily cycles, namely that the market could be coming into an area in which the down pressure might be abating. Both had nested down impulses, the last of which fully unwinded with a 3rd END. Since that moment, both have been oscillating, although 60min had a decent attempted at starting yet another impulse down, when price broke below the most recent support triggered at 1876. The impulse down was NOT confirmed though and the market managed to come back to it. The next session appears to be important in terms of the support levels holding or not. Another interesting aspect is that the mcm-CCI on the 135min cycle started to diverge from the price action. Namely, the market made a significantly lower low, but the mcm-CCI made a slightly higher one (highlighted on the chart). Usually the divergence between mcm-CCI and price signals that a reversal of trend is near.supports a bottom and subsequent bounce.

60 & 135min Cycles

60 & 135min Cycles

That being said, although all primary LT cycles show an area which could be potentially close to a bottom and subsequent reversal, trying to front-run reversals is very risky, since at this point the market could stage a crash before reversing. But looking for reversal signs, especially when most people are getting more and more bearish is a wise approach. 60 and 135min holding the support levels and NOT breaking into new down impulses would be a first sign that the market is finding its footing. While breaking into a subsequent up impulse would almost confirm a reversal of trend.

Major Support Dead Ahead – If Broken Support is Virtually Nonexistent Till the 1600’s

MSP, as usual, has done a great job of timing out the market cycles. The next inflection point is projected for around the 22nd of January. Meanwhile we have reverted to BEAR MARKET microstructure on the short term MSP additionally we have a critical set of supports coming up with thin zones directly below them. If these supports break near-term the event brings the potential for lower levels to be reached within the MSP inflection point.

Emotionally, the market is NOT in good shape and lots of cash has been extracted from the market on selling days and this has NOT been replenished on buying days. These are consequences of unbridled gambling by the FED directed global central bank cartel system

No matter the case, we remain extra cautious or short-biased bounces in the near-term till we have the potential for a larger inflection point.

As per the "mcm Real January Effect" we have been tracking since the first two days for the year and confirmed with the first-week market structure and then finally this weeks market structure some pronounced negative company in terms the "Real January Effect" outcomes which presently suggest a interim low in March with yearly lows in October or November. Potential Intra year drawdown is up to 45% if the market confirms these market structures with its January close.

Careful out there.

mcm MSP Projection as Published in Aug/Sept

mcm MSP Projection as Published in Aug/Sept

mcm- MSP Proejctions Actual to Projection Comparison

mcm- MSP Projections Actual to Projection Comparison

S&P500 Levels chart

S&P500 Levels chart

S&P500 Historical Emotional Extremes chart

S&P500 Historical Emotional Extremes chart

mcm Accumulation Components Indexes

mcm Accumulation Components Indexes

 

RSI Cycle Chart with mcm-CCI Advanced

Full Dynamic Range RSI Cycles Explained

The Full Dynamic Range RSI Cycles are a proprietary product developed by MCM which measures the RSI without incorporating a time component. It is fully price dependent and it moves with 6 tick range bars, being possible that one bar is a 1min bar or a 10min bar or any time frame in between.
The RSI Cycles point out, first of all, the cycle movements. For the basic info on cycles, please read the following article: http://mcm-ct.com/blog/weekly-charts-explained/

Apart from following the Cycle movement, the RSI Cycles contain a few more interesting tools. Below is a zoomed-in chart of the RSI Cycles which points these out.
First, at the bottom of the chart there is the directionality tool (point 1). At point 2 you can see the arrows pointing at the overbought (dark red) and oversold ranges (light cyan). These are calculated levels at which the market participants would perceive the price as being too high or too low, meaning oversold or overbought condition, at any particular time. These work and move similarly to the Bollinger bands and when the price touches either, the bars will appear highlighted - oversold condition with cyan color (point 3) and overbought with red color (point 4). As it can be seen, an oversold or overbought bar does not mean that the market will stop and reverse immediately and the condition can persist for a while, however it is an indication that the market is perceived as being in an extreme situation and usually this is corrected, either through a reversal or a side-ways movement. As it can be seen in the example, the market moved from oversold to overbought very quickly and finally the overbought condition resolved lower.
At point 5 there is an example of how the different signals are reinforcing each other. The market was in an overbought condition immediately after breaking above the resistance (magenta line) which meant that the up impulse generated had low odds of turning into a true impulse. Additionally the directionality tool reversed from the highs and went at the lower line and stayed there. The impulse up was reversed quite quickly afterwards and the RSI Cycles oscillated for a while, until point 6 when it broke into a down impulse.
The cyan line which moves between the 2 ranges is the mcm-Moving Average (MA). An impulse is confirmed only after the mcm-MA moves above (or below) the break-out level - we can see it confirmed the up impulse at point 5 by breaking above resistance and also at point 6 by breaking below support.

RSI_Cycles_1 in post

RSI Cycles - zoom-in example

An important addition to the RSI Cycles has been done this week, through the introduction of the mcm-CCI line (at the bottom, below the directionality tool). That is a proprietary tool which shows the character of the market - bullish or bearish. It moves between +300 and -400, with 0 being the dividing line. When the mcm-CCI is below 0, the character of the market is bearish. When it is above 0 - it is bullish. Additionally the color of the line shows how strong that inclination is - the brighter the green the more bullish, the darker the red - more bearish. There are several ways in which the mcm-CCI can be used, apart from showing the character of the market in any given time. These are the following:

  1. When the mcm-CCI is testing 0 - that is a significant event and is usually followed by a strong reaction. For example if it comes from a negative value and breaks above 0, that is a warning that the tides are changing and more bullishness is coming.
  2. When the mcm-CCI is testing a round number (+100, +200, -100 etc). Failing at one of these numbers usually triggers a strong reaction, as is breaking one (not as significant as 0 though)
  3. When mcm-CCI is approaching an extreme level - either close to +300 or to -400. That is a sign that the market is at an extreme and a reversal is not far away. When the mcm-CCI is close to +300 and then heads lower, the confirmation that a reversal happened usually comes if it then breaks below +100, so one does not need to wait for 0 to break (usually that will happen as well, but breaking below +100 is confirmation).
  4. When the mcm-CCI is diverging from price. For example price is making lower lows, but mcm-CCI is making higher lows. That is a sign that a reversal is near. The bigger the divergence, the stronger the signal. A difference in mcm-CCI of more than 50 points would be considered a strong divergence.

Below, there is one example which illustrates how powerful this tool is, especially when viewed in the context of the other RSI tools.

In the chart below we can see that the market never changed its bearish character, not even after the big reversal from oversold (around 1925) to overbought (around 1945). At point 1, at the highs we can see that when the market was trying to break into the up impulse, the mcm-CCI was testing the 0 level. And it failed. That failure combined with the overbought condition of RSI Cycles bars immediately after the up impulse was attempted and the directionality tool reversing from top to bottom were very strong signals that the impulse up would fail. Which is exactly what happened at point 2, when the price went below the break-out level and a support level (cyan) was generated. After that the market oscillated for a while, but the weak character was shown not only by mcm-CCI, but also by the fact that the support levels were broken, while the resistance levels were respected. Finally at point 3, the market broke into a down impulse, confirmed by the mcm-CCI which went lower and the directionality tool. At point 4, a divergence between the mcm-CCI and the market price started. While the market made lower lows, the mcm-CCI made a low slightly below -300 and then started to move up, making higher lows. The fact that the down impulse is unwinding (had a bearish retrace - BR - and an END) at the same time, means that the trend is likely changing and a bounce is expected. The down impulse will likely need a 2nd or even a 3rd END to completely unwind, but a reversal is expected nonetheless.

RSI Cycle Chart with mcm-CCI Advanced

RSI Cycle Chart with mcm-CCI Advanced

MCM Newsletter – Outlook for Week 4 – 8 Jan

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): neutral
Short-Term Trend (60min&135min): down

Details:
The weekly cycles are still just oscillating. Resistances are sitting at 2110.5 ES and 17907 YM. Although the normal expectation is for the market to head lower until a new support level is triggered, it is interesting that the price is currently in an area which previously produced quite solid bounces (highlighted on the chart). It remains to be seen if it will manage another one now or the market will accelerate on the downside.

weekly_4.1.

Weekly Cycles

On the daily cycles, both YM and ES headed down after bouncing from the support level. ES has a resistance level in the making at 2075.25 which will confirm after the close. That is significant since it is a 2nd END and likely means that the impulse up finished unwinding, so ES could start oscillating like YM. Also interesting is that YM broke below its support level. It is still far away from starting an impulse down, but it is important to watch if the level will be recaptured in the next sessions.

daily_4.1.

Daily Cycles

The 60 and 135min cycles both broke into big down impulses, after they finished unwinding the up impulses. Both broke support at the same level - 2053, and accelerated down after back-testing that level. The directionality tool also confirmed the down move on 135min (highlighted on chart). Considering that price moved significantly lower, the normal expectation is that they will require several dissipation phases (Bearish Retraces - BR, and ENDs). For the 1st BR, the area around the predictive pivot would be one to keep an eye out on - it sits around 2030 on both timeframes.

60&135_4.1.

60 & 135 min Cycles