Bear Impulses Retesting Before Next Drop Sets-Up

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.

HAL Daily Trading System

HAL Daily Trading System

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.

Daily Impulses

Daily Impulses

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.

Weekly Impulses

Weekly Impulses

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.

60 and 135 minute Impulses

60 and 135 minute Impulses

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.

3 replies
  1. mcm-peter
    mcm-peter says:

    We would love to understand this comment…If there was anything wrong about the powerful and as we see correct observations and potentials made in this post for further upward progress int he market much to the contrary of most every analyst out there, and being that the bear impulses have NOT been sufficiently retested even after today’s close, its difficult to understand what more we could have done. In the lounge and here we have been consistent looking for strength to test impulse breakdowns which are from 2050 area and given that the expectation was for 1950 at a minimum, its difficult to see whee this post is a disservice. The Larger trend is down and expectation is for down into mid month after most likely turning sometime next week most likely early. NO WHERE IN THIS POST DID WE SAY GO SHORT. What we said is there is substantial work to do to test impulse breakdowns and that the expectation is for a resolution tot he downside once the tests are complete which is likely over the next few days. We are not attempting to be contrary, but are just confused about, given all the bad advice out there, accurate and insightful advice is a disservice.

  2. mcm-peter
    mcm-peter says:

    One more comment, in the Lounge, members knew early that timing for a low today was around 9:30 to 10:00 AM – outisde limit 10:30 AM and probabilities favored a rally into the close. They also knew the systems were NOT short. However as of today’s, close both RVS and HAL models did take initial short entries – we are in BEAR impulses down after all on the Daily and Weekly charts. Additionally, we pointed out that 1:00 PM was likely timing for a pullback and during that pullback that massive Cash being added to the market, Accumulation Index at highs, Directionality at highs and large amount of Rich Trading Tickets further increased odds of a close at the highs.

    A closer read of our post should reveal that is was accurate and insightful. Additionally, perhaps joining our first class community would be helpful to you.

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