mcm Market Update For Week 38

The FED week was a good omen for the bulls and the market finally managed a small break-out above the choppy range in which it was stuck for a few weeks already. We had several short term cycles break into up impulses on mcm, which provided early clues about this ramp.

Coming back to the big picture, the weekly cycles show a dangerous development for bears. The back-test of the 2105 break-out level appears to have held. The market bounced from there and if it will continue to go higher that will be a situation in which shorts would have to be patient for quite a while. YM continues to underperform, however it bounced when it met the mcm-MA and now managed to get above the broken resistance also. The bears do have one more chance and that would be to reverse this bounce rather directly. The fact that the directionality tool is still heading down is also a sign that the back-test is not decided just yet.

Weekly Cycles

Weekly Cycles

The daily cycles are the reason why we are not fully in the bullish side just yet. They unwinded the big up impulses started back in March. YM completed that unwind (with a 3rd END resistance), while ES only had a 2nd END and could still (theoretically) get a 3rd END. In the mean time, they broke below support and actually started down impulses, although now the price came back above that support. So bears have 2 options here. One would be a direct reversal, which would mean the back-test of the previously broken support held and the down impulses are confirmed. That would be very bearish. The 2nd option is for the market to go higher and reverse after ES triggers the 3rd END resistance. As we can see on YM, that 3rd END doesn’t necessarily require a lot of upside to trigger. Once that happens, reaction to that resistance will be critical. If the bullish scenario on the weekly is to be confirmed the market could break into a nested impulse on the daily. But the normal expectation is for downside from there. As always, the shorter term cycles will provide early clues into which scenario will play out.

Daily Cycles

Daily Cycles

The Elliott Wave projection of the NYSE is also pointing to a crossroads with regards to market direction.  With minimum expectations of the structure being met, waves one and four overlapping, the market is free to do as it sees fit from here.  The duration of the fourth wave seems to be lacking taking into consideration that from a seasonal perspective, most bottoms aren't put in place till sometime on or after the second week of October.  While the projected paths are very insightful as far as targets and bias is concerned, the fact that markets don't go in a straight line as the projections do makes for a challenge.  Keeping that in mind, although we've bounced in what appears to be the final leg up to new all time highs, there is a very good potential this is just a counter trend move that has the potential to bottom at 'or 2' into the month of October.  Best to your trading this week.

NYSE Composite

NYSE Composite

mcm Weekly Market Update For Week 37

The past week started just as brutal as the previous one ended. After making a new low on Monday in the overnight session, the market rallied 50+ points from that low. Luckily the mcm tools nailed that low and warned of the bounce beforehand. If you didn't have a chance to read the article detailing how that happened, you can find it here: http://mcm-ct.com/blog/anatomy-of-a-tradable-bottom/  While a valiant attempt was made to recoup some of the previous weeks losses early on this week, ultimately they failed with the NYSE closing roughly 0.75% lower than the previous weeks close.

Monday's action was the highlight of the week, the rest of the trading days being more choppy, with a lot of back and forth typical for sideways action.

The weekly cycles show that the back-test of the 2105 break-out level is ongoing. Market bounced from there, but it's too early to call for a successful back-test and sound the all clear for the bulls. The action in YM is also a warning sign, the price sliced directly through the break-out level and is currently in a direct overlap. The action in the next 1-2 weeks appears decisive for a resolution of the back-test and 2105 is still a very important level and worth keeping in mind.

Weekly Cycles

Weekly Cycles

The daily cycles provided an excellent signal last week also. Namely, Monday's rally stopped almost exactly at the previously broken support sitting at 2154.5. The market retreated from there and then chopped around inconclusively. So it appears that we have what looks like 2 successful back-tests. One on the upside (on the weekly) and one on the downside (on the daily). The resolution of one or the other will paint the medium term picture. In the meantime the 2 levels are very important and critical to keep an eye on (2105 and 2154.5).

Daily Cycles

Daily Cycles

The preferred path outlined in last weeks update on the NYSE tracked exceptionally well despite the massive volatility we found early on in the week.  Currently we are at a crossroads as to whether we'll continue down on the path to 'or 2' or stage a rally from this general vicinity to cyan 3/C/5.  In Elliott Wave there are some requirements that must be observed for the validity of a Ending Diagonal (Technical Analysis rising/declining wedge) structure.  The first which was satisfied with this weeks price action with the overlap of the first and fourth waves.  The second is that the fourth wave cannot be longer than the second wave.  This second criteria is of great importance in this instance as it will serve as an early warning that price will have a greater probability to head to much lower levels if that criteria is broken.  This week is likely to be an important one with regards to which outcome becomes the most probable.  Trade safe.

NYA

NYA

 

 

 

 

S&P500 Expert Lounge Update –September 14, 2016

Good morning everyone,

These are key timing for today:  12:30PMEST

These are key MA levels:  5EMA 2145, 10DMA 2153, 20DMA 2170,  50DMA 2168, 100DMA 2123

These are key Fib Levels:  2157, 2146, 2113, 2082

These are key primary and intermediate levels:   2155 (intermediate minor), 2131(intermediate minor), 2126(primary major)

Here is today's market look at the S&P 500 for Wednesday, September 14,  2016:

A quiet overnight session is currently leading into weakness starting from the premarket session with the white, red, and magenta MSP's all in the realm of reason, so be on the alert at mid day.  HAL and RVS still remain in their long placemarker positions which gives a marginally upward bias, but these can be closed at anytime so it is best not to overweight them.  It is going to be another exceptionally quiet day on the economic data front with only EIA Petroleum Status Report coming out at 10:30AMEST.  Be mindful of the 60 and 135min cycle charts as they have a nice range defined with current Bearish Retraces and Ends in place.  Good luck today.

MSP

MSP

Primary and Intermediate Levels

Primary and Intermediate Levels

S&P500 Expert Lounge Update –September 13, 2016

Good morning everyone,

These are key timing for today:  9:30AMEST, 3:00PMEST

These are key MA levels:  5EMA 2158, 10DMA 2163, 20DMA 2173,  50DMA 2167, 100DMA 2122

These are key Fib Levels:  2142, 2135

These are key primary and intermediate levels:  2176(intermediate minor), 2155 (intermediate minor), 2131(intermediate minor), 2126(primary major)

Here is today's market look at the S&P 500 for Tuesday, September 13, 2016:

Consolidation looks set to continue through the day session from the overnight with the magenta and cyan MSP best representing the price action up to the time of this writing.  Price action at the open should be the deciding factor as to which path is most probable, so be wary of the 9:30AMEST timing window.  Another quiet day with regards to economic data with only the Redbook release at 8:55AMEST.

MSP

MSP

The historical extreme's chart worked wonders again as we reentered the void and raced all the way back up to the newly formed levels up near the all time highs where it found resistance again.  Please be cautious with positions in the empty zone because as we've seen over the past two days, price has the ability to traverse this area in a very relentless fashion.

MSP

Historical Extremes

As noted yesterday, the Primary Major level was overshot before catching a massive bid off the 100DMA.  This overshoot serves as a warning that price has a good chance of retesting levels below there in the not too distant future.  We are still in the early stages of the seasonally weak period which adds weight to the notion of potentially lower prices.  Good luck today and keep an eye on market open timing.

Primary and Intermediate Levels

Primary and Intermediate Levels

 

Anatomy of a Tradable Bottom

The decline from Friday 9/9 was brutal. After months of range trading to get a 50+ points decline in a single day can be traumatizing, especially if caught wrong-footed playing the long side. In fact it can be so traumatizing that it is hard to even consider longs immediately after that. But the very next trading day, after continuing the decline for another 10-15 points (probably to shake out the last remaining longs and draw in some more shorts), the market proceeded to rally 50+ points from the ES low in the overnight. It is very hard to keep the objectivity when faced with this type of volatility, but one thing the mcm tools definitely have is the fact that they are objective. They are based on real data and when they trigger a signal, that signal is objective. And when signals align... Well, wonderful things tend to happen. The mcm tools signaled the 2100 ES overnight low from 9/12 as a VERY important level with significant support and, as a result, a high probability long.

And here is why.

First off the virtual tick tools signaled the 2100 level as very important. At point 1, around 3:30am it signaled a tiny capitulation bar (yellow bar on chart) and also a selling Xtreme (or sell X, which means there was an extreme selling effort in which all willing sellers have sold). At point 2, around 4:30am, it triggered another sell Xtreme with an Xtick (a sort of super sell Xtreme, to put it in simple terms), which came at the same level of 2100. At point 3, around 7:30am, the market tested once more the sell X and held. At point 4, around 8:30am, the tools signaled a buy X Xtick, with a capitulation bar (red bar), which were broken above. Ever since that break-out, which was held, the market rallied and never looked back.

V-tick tools

V-tick tools

Reinforcing the signal of the V-tick tools, were several cycles which were showing support at the exact same 2100 level.

First off the 1 and 2.5min cycles. For easier reference I kept the time points from the v-tick tools (1= 3:30am, 2=4:30am, 3=7:30am, 4=8:30am). 2.5min had support at points 1 and 2, at point 3 it was in a normal oscillation wave, while at point 4 it also broke out above resistance and started an impulsive wave up. 1min is too fast and the 1 and 2 time windows are not shown. But at point 3 we can see that it also had support, while at point 4 it also broke into an up impulse by breaking above resistance.

1&2.5min Cycles

1&2.5min Cycles

Continuing the story is the 5&15min cycle. At point 1, the 5min cycle had a 3rd END support. That means it was marking the complete unwind of a previous impulse down and likely to trigger a bigger reaction in the opposite direction. At point 2, it held the 2nd test of that level. At point 3 it had a new resistance, but at the same 2100 price level. At point 4 it also broke into an up impulse. The 15min cycles shows pretty much the same story. At point 2, it triggered an END support (marking the unwind of the previous down impulse), then at point 3 it held that level, while at point 4 it broke out into an up impulse as well.

5&15min Cycles

5&15min Cycles

Next are the RSI cycles. Same story again. 3rd END support at 2100 at point 1. New support which held at point 2 and 3. Break-out above resistance at point 4 and start of impulsive wave up. An additional signal was the fact that the CCI (the red line at the bottom of the chart) was diverging at points 1, 2 and 3. Market made a new low at point 1 and tested that level at points 2 and 3, but CCI was going up.

RSI Cycles

RSI Cycles

Following are the Tick Tools. These generate signals only during the day session, while V-tick generate also during the overnight. Right off the open, the tools generated a sell X with a 98% Xtick which was never contested and market proceeded to rally directly from there. No surprise, since 2110 was previous resistance broken above on several cycles and a buyX Xtick on v-tick tools. After rallying from 2110, the market met a buy X at 2125, but broke above and continued to move higher, with the bullishness confirmed.

Tick Tools

Tick Tools

Based on the confluence of signals, 2101 ES was called as a high probability trade in real time in the Expert Lounge here at mcm. The trade was never in danger of being stopped out and once the break-outs were confirmed on several cycles (first at 2104, then 2110, then 2114, then 2125), there was no real reason to exit before netting 30 to 50 points, depending on the exit strategy.

S&P500 Expert Lounge Update –September 12, 2016

Good morning everyone,

These are key timing for today:  9:30AMEST, 2:00PMEST

These are key MA levels:  5EMA 2158,  50DMA 2163, 100DMA 2121

These are key Fib Levels:  2127, 2139

These are key primary and intermediate levels:  2131(intermediate minor), 2126(primary major), 2115(intermediate major)

Here is today's market look at the S&P 500 for Monday, September 12, 2016:

The market continued its waterfall in the overnight session but with the substantial bounce this morning it looks to recoup a good deal of the earlier losses.  Cyan seems to be the odds on favorite at present with the early morning strength, but keep an eye on the gap and tick tools to see what makes sense at the open of regular trading hours and the coinciding timing window.  Price action will be the primary focus as there are no economic releases to speak of, but there are a few Fed heads to speak.

MSP

MSP

How price behaves around the primary major level will be important to note because it will give clues to what kind of price action we should expect going forward.  A solid rebound from that area will likely produce a more pronounced bounce, but an overshoot to the downside should be taken as a warning that areas below that level will want to be tested.

Primary and Intermediate Levels

Primary and Intermediate Levels

As noted on the historical extremes chart last week during banter in the expert lounge, there was a substantial void between newly formed extremes and the existing.  As soon as selling began, this gap turned into a massive vacuum and traversed the gap very quickly.  Now that we've reached clusters of historical extremes again it is most probable that price will become choppy again.  Keep a close eye on the tools and timing into market open to get an idea of what is in store for the session.  Good luck today!

Historical Extremes

Historical Extremes

Technical Laboratory Update For The Week Of September 11, 2016

The narrowest sustained range in 100 years of DJIA history came to a dramatic end this week with a gut wrenching two plus percent decline thus trading the entire range in a single day.  As dramatic as the decline was, it is still well within the scope of reason for what we've been looking to transpire since the first of August once prime trading season got underway.

Range

DJIA Range

 

It was no surprise that VIX took off on Friday from its historically subdued levels and was one of the clues that was pointed out last month was a huge area of concern for any substantially bullish scenarios.  Historically, any trade below a 12 handle is typically met with a spike up to 17 at a minimum which was touched upon in the August 21 weekly update.

VIX

VIX

While the VIX chart got us in the ballpark of what to expect in the months ahead, the DJIA seasonality charts narrowed the time frame down substantial.  Simply by noting the presidential election year cycle and historical YoY weakness that coincides in the early stages of the month of September and runs typically into the first of October set the stage for what took place on Friday.

Seasonality Comparison

Seasonality Comparison

Lastly was the technical backdrop to lay this all upon with the preferred Elliott Wave path in magenta after we had tagged the 2191 symmetry target that was achieved back on the 15th of August.  There is no change in preferred path since we began outlining at the inception of the Technical Lab updates.  There are some caveats that need to be put into place especially considering how early we are in the seasonally weak period and how dramatic the initial drop was.   The 2110 to 2100 area will provide a great deal of clues as to whether we are going to continue the waterfall like decline down to the lower 'Expanded Flat Wave 2' range, or if we will find a bottom at the lower rising wedge/ending diagonal trend line.  Good luck this week and trade safe.

SPX

SPX

mcm Weekly Wrap_Week 36

After being range bound for quite a while the market finally broke out, or better said broke down. The brutality of the decline was surprising, the market losing approximately 80 points in just 2 days. As the readers of the mcm Weekly Newsletter know, we have been expecting a back-test of the 2105 level for a few weeks now and the market delivered just that, although a bit abruptly. Coinciding with the Weekly Newsletter, the Technical Analysis Lab weekly update has been noting since the start of August to expect weakness coming into the beginning of prime trading season with decade, presidential, and historical seasonality all aligning for the early fall season.

The weekly cycles show why the 2105 level is so important. It was a resistance level above which the market broke out and it became an impulse up on ES (after the mcm-MA also broke above that level). And usually, after an impulse is confirmed the market comes back to back-test the break-out level. An interesting fact is that YM has under-performed significantly on the rally and, although it also broke out above the resistance level, it was nowhere close to confirm the up impulse. Also, YM sliced right back below the resistance level on Friday's drop. The current back-test on ES is very important. Holding it and bouncing would be very bullish, while breaking back below would reverse the up impulse and cancel the bullish momentum.

Weekly Cycles

Weekly Cycles

The daily cycles show why we were doubting (and still are)  the real break-out into an up impulse on the weekly. They have been in a big up impulse ever since it broke out above resistance around 1950 ES. The impulse up has started to unwind with a bullish retrace (BR) and an END, then another and a 2nd END, so it was in a terminal phase, not supportive of a new big up move.

Coming back to the recent past, the daily cycles show nicely the brutality of the decline registered last week. The market basically lost aprox. 80 points in just 2 days and sliced directly through the support levels. In fact ES is now close to confirm a down impulse. As we were mentioning in the mcm Newsletter last week, breaking directly the support levels before resistances trigger is very bearish, although it depends a lot on what the market does in the next 2-3 days. If the break-down is confirmed and the market cannot manage to bounce back to or even above the support levels, then the bearishness will be confirmed. We do have to mention that both ES and YM triggered LREs (lower risk entries) for longs on Friday, so a near term bounce (maybe after a minor new low) would be normal expectation based on that.

Daily Cycles

Daily Cycles

There are a couple of options from an Elliott Wave standpoint that we are currently tracking. Although our primary focus is for the S&P 500 and its futures, we do track many other markets as well, one of the those being the NYSE Composite. Weighting a number of various items, expectations are for some near term weakness and then another run at new all time highs, but the depth of the correction currently underway can take a couple of paths as noted above.

NYSE Composite

NYSE Composite

 

 

 

MCM Newsletter – Outlook for Week 12 – 18 Sep

Executive Summary:
Main Trend (weekly): up
Intermediate Trend (daily): up
Short-Term Trend (480&288min): down/neutral
Details:
As mentioned already several times in the previous newsletters, the normal expectation was for the market to back-test the break-out above resistance. This is exactly what happened last week as market dropped with conviction and ES is now back-testing the impulse up break-out. YM is diverging again having already failed the back-test by dropping below the resistance level. Of course, YM never confirmed the up impulse, so the ES back-test is more important. What happens next is key and the normal expectation would be for the previous resistance to provide support even if, in the end, it will fail.

Weekly Cycles

Weekly Cycles

On the daily cycles, we can see nicely the brutality of the decline. The market basically lost aprox. 80 points in just 2 days and sliced directly through the support levels. In fact ES is now close to confirm a down impulse. As we were mentioning last week, breaking directly the support levels before resistances trigger is very bearish, although it depends a lot on what the market does in the next 2-3 days. If the break-down is confirmed and the market cannot manage to bounce back to or even above the support levels, then the bearishness will be confirmed. We do have to mention that both ES and YM triggered LREs (lower risk entries) for longs on Friday, so a near term bounce (maybe after a minor new low) would be normal expectation based on that.

Daily Cycles

Daily Cycles

Both 480 and 288min cycles triggered new resistances close to the highs after which the market dropped strongly. It is interesting that support levels did not trigger, so once they will, they will be very important with a bounce from there being the normal expectation.

288&480min Cycles

288&480min Cycles

In conclusion, after being range bound for quite a while the market finally broke out, or better said down. We have confirmed down impulses on all short time frames - 5, 15, 60, 135 (not shown) and we broke below support on the daily cycles as well. The speed of the decline was very high so the market is short-term oversold, however it is important to see if but also how the bounce will shape up. All the impulses down need to unwind, so some bounces followed by corrections to put in BRs and ENDs is the normal expectation. Bigger picture, the break-down below support on the daily is very important and if the market does not bounce towards the break-down levels in the next 2-3 sessions, that will be a serious warning for longs.

S&P500 Expert Lounge Update –September 9, 2016

Good morning everyone,

These are key timing for today:  10:45AMEST, 1:00PMEST

These are key MA levels:  5EMA 2179, 10DMA 2177, 20DMA 2179, 50DMA 2166

These are key Fib Levels:  2171, 2168, 2162

These are key primary and intermediate levels:  2180(minor), 2155(minor), 2148(minor)

Here is today's market look at the S&P 500 for Friday, September 9, 2016:

Happy Friday!  RVS tacked on a 1CPM long position at close of business yesterday so it will be interesting to see what transpires with today's session as weakness asserted itself in the overnight.  MSP is looking to bottom out as early as 10:45AMEST, but could potentially run a little longer into the last timing point of the day at 1:00PMEST.  There are a confluence of technical items that show 2162 as an area of interest with the 50DMA, rising TL, and a Fibonacci extension target.  Good luck today and we hope everyone has a phenomenal weekend!

2016-09-09_8-14-12-intraayMSP

MSP

Primary and Intermediate Levels

Primary and Intermediate Levels