This week was an unprecedented week. In the mcm Lounge all week we have posted details regarding these charts and trade-setups as discussed here, so, lets dive in. We are currently in large Bearish Impulses, as mentioned before - these bearish impulses are still in play, and suggest market risks of favorable for the foreseeable future, to the downside in the larger view. However, the path downwards is NOT a straight line, as we mentioned in our post earlier this week. One of the most common and misunderstood elements of the markets is for them to be predisposed to retest emotional and cyclic inflection points. This is what we can see going on in the markets presently and why, starting Tuesday, we were NOT short-term bearishly disposed.
Of note, the HAL Trading model triggered a counter trend long.The trade event is a small risk size wise and based on a relatively aggressive but successful setup. Certainly it is cautionary to people predisposed to short risk when such a condition triggers. This trade triggered by HAL, is now nearly closed down to one remaining contract after having booked 90% of the position for solid profits. Once this trade is fully closed (which will likely occur today), the system will be on the search for high probability short risk and will look for prices and activity with which to establish such risk.
Below, in addition to the warning flags from the HAL trading model, cycle charts generated preliminary "end of impulse" setups – which are indicated with an "END" label. Usually for very strong down impulses, a set of dissipation cycles need to trigger, which in a best case scenario, requires another magenta resistance cycle to generate which would then be followed by a 2nd END and possibly a 3rd END events. However, in this situation, due to the larger weekly impulses, it should be expected that support cycles have a predisposition to break down into nested impulses which should usher in a much stronger decline once this counter-trend move is complete.
Below, are the weekly impulses discussed above. These impulses require a bearish retracement label (BR) and then an END. This Bearish Rally even can trigger within a large range but ideally would be expected to top out between 1960 and 2030 if not earlier. Thereafter, more than likely some dissipation cycles would be needed to complete the structures. This will require considerable effort and time. It means that pronounced and sustained down movement should most likely be expected in the near future. The result of the upwards test we are currently experiencing creates good probabilities of triggering a "bearish retracement" classification. Ironically, the HAL model may very well be joining that bearish retracement with an establishment of short risk if the market complies with the scenario.
As can be seen below in the shorter term cycle charts, the fractals are occurring across multiple time frames. The likely timing for the weekly bearish retracement would coincide with ending of the impulses up that are currently being attempted on these charts. The 60 minute chart and the longer-term chart shown below, ideally, would require a (BR) and (END) structure to complete. Characteristically, even in bear markets, which is what our models have classified the current market, the first two days to three days of the month tend to have some bullish predisposition. If this is so, then markets have ample time to complete the structures and patterns.
In closing, once the shorter-term charts start generating downward impulses, starting from the very short-term 1, 2, 5 and 15 minute charts, risks for turn downwards increases dramatically and will likely complete structures on the intermediate-term to longer-term cycle charts. This can happen, starting at any time. Complacency in this particular market is not a good option. While the markets can extend upwards today and possibly into tomorrow, these frail impulses can truncate abruptly.