mcm market update 30.Jan.23

Main trend: neutral

ST trend: down

The market rallied relentlessly in the last weeks, with every drop attempt being bought aggressively. Also of note is that the market saw up squeezes in the last 3 consecutive days. So definitely the market was overextended in the near term. Friday saw bulls pushing beyond the 4100 ES mark, but they gave it up in the last 30m when a aggressive 20 point flush occurred.

The bigger problem for bulls is that that decline seems to have been only the beginning of what looks like a deeper correction. Sunday and Monday saw continued weakness and we dropped another 40 points from there. Bulls lost ML and price is now directly testing macro-ML. If this line is lost, then trend ML is the last defense for the up trend. Bulls could still repair some of this damage before RTH open, but so far the price action is definitely bearish. Each tiny bounce is pounced on and sold to new lows. Danny has been capping price like a champ.

In terms of the larger picture, it is possible the market is heading back to 3700 area, before heading higher above 4100. It all depends on whether bulls can defend macro-ML and trend ML here. Both are at huge technical levels and if they are lost for more than a head-fake, then that 3700 target would start to increase in odds.

mcm daily market update 16.Dec.22

Main trend: down

ST trend: down

Yesterday I alerted the members in the mcm chatroom that if bulls were unable to defend the opening SE Xtick and at least try to fill the gap, the breakdown would point to 30-50 points lower and we could be in for a strong down trend day. 1st part proved to be conservative as open to LOD was 70 points, while the 2nd part was spot on. TTs provided nice opportunities to re-short or start a short for those who missed the initial breakdown with danny capping price all day and with several BEs which hit (and held). In such strong trend days best is to play the trend until it breaks, which only happened 1.5h before the close with a decently strong bounce. Danny is an amazing line for showing the immediate trend.

In the o/n we had the exact same set up which we had yesterday in the o/n and triggered the 1st short opp. FGSI bouncing hard on shallow price movement and setting up bearish EE above centerline. The inability of price to conquer the prior high triggered the sell and we sold off 40-50 points, just like yesterday. This sets up another large gap down (if holds until RTH open), and back to back runaway gaps can lead to crashes. That being said, I do not think the market can sustain 2 runaway gaps in an OPEX week. So I would expect MMs to change the tune and attempt to fill it rather than let it run like yesterday. The opening SE will help in identifying if we breakdown again and run or not.

In terms of the big picture, bulls are in big trouble here. They lost the trend (all MLs were broken and are now above price and red) and also the wave structure off the last 4100 high looked like nested bear waves which now confirmed with yesterday's runaway gap. Once they manage to stop the bleeding ,the shape of the bounce will tell us if we are going to revisit the Oct lows or not. In anycase it looks like a bigger retrace is now needed before potential new highs above 4100.

mcm daily market update 6.Dec.22

Main trend: down

ST trend: down

The market put in a high near 4100 last week before pulling back from there. 200DMA is also there plus several technical resistances, including the "bear market TL" coming from ATH, so no wonder that triggered a reaction. The bad news for bulls is that the highs were unconfirmed on all GSIs and price broke below all MLs as well, confirming the change of trend.

Yesterday we saw a clear down trend day with every pop being sold, while the o/n continued in the same manner. Yesterday's LOD is an important lvl on the downside, as we have bullish EE on FGSI vs that low. On the bull side, they need to hold that low and attempt to breakout above 400bar MA (1st step), then to challenge ML.

From a larger picture perspective, the rejection at 4100 looks ominous for bulls, especially coupled with the GSIs showing those highs as unconfirmed. On top of this, the decline off that lvl looks nested, meaning a series of 1-2 waves. If the market continues to drip lower, the drop is likely to accelerate soon. The bulls have one chance here to stop the bleeding and stop the decline as a rare double 3 correction (WXY). The 4020-4040 area is the very important area which bulls need to win back asap. No coincidence that both ML and macro-ML are in that area.

mcm daily market update 21.Nov.22

Main trend: up

ST trend: neutral

Markets finished last week undecided putting in an indecision doji, ending the week near the lvl where they started, with long tails both up and down. Friday was OPEX and the whipsaws didn't dissappoint, large gap up, that got sold hard, then LOD hit near mid day and push higher into the close to end at the infamous 3960 lvl.

The o/n was pretty indecisive, however price dripped lows and broke below ML and macro-ML. Bulls are not beat yet, as Friday's low wasn't broken, but the loss of ML and macro-ML is a warning. Those are the key levels going fwd. If bulls cannot win back ML and macro-ML, then that would mean bears are taking control and we have likely started a larger degree decline. If they do manage to breakout, then they have a shot at pushing this back higher.

In the big picture, things are at a cross roads here. There is at least a chance that last week's high marked the end of the entire move off 3500, which would mean a large retrace is due. Bulls still have some outs as the decline off that high is only 3 waves so far and we overlapped the low of the 1st wave. So if bulls can push here, they can "lock in" another 3 wave decline (which is corrective) and can extend this above the recent highs, potentially into the next resistance area near 4100. The problem is, if they cannot do that and the lows are broken, the most obvious bearish pattern would be a bear nest, which would mean an acceleration to the downside. From an EWT perspective Friday's high is important and then the 4000 lvl on the upside while 3922 SPX and then 3900 are key on the downside.

mcm daily market update 7.Nov.22

Main trend: neutral

ST trend: up

Things were looking pretty grim for bulls last week after a hawkish FED broke the up trend, price slicing below all MLs and some important TLs. On Thursday bulls managed to defend the 3700 SPX lvl and chopped in a 50 point range. Friday saw a surprising gap up, which was sold twice, but bulls managed to come back each time. Price rejected on Friday at macro-ML, but bulls managed to defend ML, albeit sloppy. So while bears had every reason to break lower, they couldn't, so it looks like they dropped the ball, bulls signaling that they are ready to take the lead again.

Sunday saw a gap down, but also that was bought and bulls managed to defend ML. Now bulls are trying to breakout from macro-ML too. These developments show that bulls are attempting to win back the ST trend.

In terms of the larger picture, EWT wise the situation is pretty complicated. We have what looks like a corrective 3 wave pattern off the 3500 lows, however the drop off the recent highs at 3910 also looks like only 3 waves so far. Given the strong bullish showing on Thursday-Friday it would seem that bulls are attempting to lock-in this 3 wave decline and turn that larger 3 wave bounce into an impulse. 3760 SPX area seems to be the key area to win/defend for both sides. Not surprisingly ML converged there in the o/n and was defended by the bulls. If bulls manage to defend this area, then 3800 is the next lvl above, followed by 3845 and 3895 which are 2 important EWT overlaps.

In conclusion, the immediate trend favors the bulls, as they defended ML and won back macro-ML. They need to hold above these 2 lines to continue the upside. Bears on the other hand would need to prove themeselves by breaking below them. Only if they manage to break back below ML will they be back in the lead.

mcm daily market update 12.Oct.22

Main trend: down

ST Trend: neutral

Yesterday the market dropped to new lows, before staging a face ripping rally until lunch time. After that the BOE crushed the bulls' hopes and the mkt lost ALL its gains to make a new low on ES and basically made a double bottom on SPX before bouncing a bit into the close.

The o/n was decently bull friendly as they continued the late day bounce and even managed to peak above ML, but the PPI came in hotter than expected, so bulls lost what was building as a gap up and now indicate a flat open. The RTH open will be important, as will reaction off it. If bulls can win ML again and hold above it, then they may have hopes at a larger bounce into a macro-ML back-test. On the other side, if bears take control early on, this can slice the recent lows to make new lows again. Therefore for today ML is key on the upside, while yesterday's LOD is important on the downside.

In the big picture, this chopping around is typical of a compressed spring before the explosion, setting up after CPI release tomorrow. Wave wise the lows do not look stable or "clean" and I would expect them to be taken out, if not today, then tomorrow after CPI. Because we overlapped the end of Sept lows, the entire move off 4300 now looks like an impulse, however the last wave (5) is still too short. Which means more downside is likely needed before the structure can complete. The last wave started at 3800, so that's the KO lvl for bears. If bulls can somehow overlap that lvl before heading lower from here, then they would have dodged a bullet. Given how the structure looks at the recent lows, I put the odds of bulls winning 3800 before we are heading below 3500 at slim to none. The GSIs also lost the clear unconfirmed lows with the subsequent lows as both FGSI and IGSI have confirmed local lows. That's not ideal since it would indicate that the initial unconfirmed lows were broken as momentum was too strong and the bounce was overwhelmed.

mcm daily market update 10.Oct.22

Main trend: down

ST trend: down

Friday the market finally revealed its intentions after the back and forth on Wed-Thu. The NFP numbers coming out at 8:30am were the final nail in the bull coffin as the market dropped 50points instantly. The forces at work managed to hold the line there until RTH open, but the cash session was simply horrible for bulls. It gapped down about 40 points, but sold off the entire day with only tiny bounces and dropped nearly 90 points more until the day's LOD.

Sunday saw lower lows being made, bears taking out quickly Friday's lows, before bulls managed to bounce back to 3650 area on ES. LOD and 3650 defined the ranges of the o/n action with 3 round trips from the lower range to the higher one. FGSI is sowhing that both sides are rather inefficient, so looks like chop until RTH opens.

In terms of big picture, no change vs what I indicated last week. I believe Wed's high marked the end of a higher degree 4th wave (of the impulse started at 4320), and we are now in wave 5 of that move targeting 3000-3300 area. Until we break the late September lows, we will have no confirmation that the move off 4320 is indeed an impulse, but I believe that can be achieved today. That area should provide at least a DCB though, to trick some bulls into thinking that a double bottom is holding and shake off some late bears. It would be strange for such a strong support area to be broken directly without a fight. So after we break that low, be on the look out for a fake breakdown and quick recovery. If they go that route, the bounce target would be the breakdown area near Friday's RTH gap open (3708 SPX).

mcm daily market update 3.Oct.22

Main trend: down

ST trend: down

On Friday the market managed to stage a nice bounce back to the 3680ish zone before failing and flushing to new lows. I mentioned that bears are in the "pay me now or pay me later" camp as the move into the lows looked incomplete and the new low confirmed my view. The sell was pretty relentless in the 2nd part of the day and RTH closed near the lows.

The bigger problem for bulls is that price was rejected at macro-ML and they lost ML quickly after that too. Which confirms the conclusion that the trend is still down, as bulls are unable to hold any support on the way down. the up moves are just DCBs to shake off bears, but once the selling resumes, supports are broken with ease. As we had a down squeeze on Friday, a ML back-test would be normal. We already had a shallow one in the o/n and it might very well be that's all we get.

In the bigger picture, not much changed vs our Friday post. The move off 3737 is still a 3-waver. Friday's bounce was simply completing wave 2. So again bears can say "pay me now or pay me later". From an EWT perspective, bulls have some near-term options, including the presumed wave 2 becoming more complex (therefore needing another bounce to 3680 area before back lower) or even this move off 3737 being part of the prior (larger) wave 4 and needing a pretty direct bounce to 3740-3750 area. I do think that's rather unlikely, but in case bulls clear 3700, then it would start being more likely. The bear option is pretty straight-fwd. Gap down that goes directly lower to finish wave 3, then DCB for wave 4 then final wave 5 flush.

mcm daily market update 30.Sep.22

Main trend: down

ST trend: neutral

Yesterday the market saw a big gap down open and flushed more after RTH oepned. it stopped near the prior lows and staged a bounce, but it was just a DCB and mkt dropped to new lows after that. Last 1h brought again a short squeeze and price got back near ML again.

The o/n was decently bullish so far. ML back-test pushed price lower, but bulls made a higher low vs yesterday's LOD and then pushed back to win ML. Now price is chopping between ML and macro-ML. Mkt is waiting for the PCE numbers coming out at 8:30 ET. That is likely to trigger fireworks so watch your stops.

In the bigger picture, the market continues to act weak. Every bounce is sold and bulls are unable to hold any support. That is not constructive price action for bulls. EWT wise, bulls had a shot at a larger multi-day bounce yesterdays at the initial low reached in the morning, but again they failed to hold and the new low points to further weakness as now the move off 3737 looks like only 3 waves and therefore incomplete. Bulls do have a few near term options, so it's not crystal clear if we are gonna break the lows directly or if bulls wanna bounce first. In any case it is again a case of "pay me now or pay me later" for bears, as yesterday's lows are unlikely to hold for long. PCE is the catalyst and after this data we will know if we are going lower directly or after another trip higher.

mcm daily market update 27.Sep.22

Main trend: down

ST trend: neutral

Yesterday the session was choppy both ways in a sign that the trend is still down, but MMs are trying to shake out put holders as much as possible. The o/n session saw 2 tests of Friday's lows and 1 test of Friday's high. We gapped down, but bulls quickly stepped in and made another push to a minor new high, before completely getting rug pulled and seeing a drop below Friday's lows. However bulls did manage to defend that area and staged a late day bounce that almost got entirely retraced near the RTH the close.

The o/n was more bullish as price rose without taking out yesterday's lows and bulls managed to test yesterday's HOD, winning back ML in the process. That initial push was sold into a ML back-test which bulls are now trying to hold. Therefore the ST trend is neutral, as there is currently a heavy battle for ML. If bulls manage to hold here, then a push into a macro-ML test above would be the likely next step and inflection area. If ML is lost, then yesterday's lows might get tested once more and this time it's unlikely they will hold.

EWT wise, it would seem the action in the last days is a 4th wave, as it would fit best the back and forth character. In terms of the big picture, it is unlikely we will find a longer term bottom until VIX pushes above 35. All prior large declines saw VIX peaking between 35-39, while the big drop from 2020 saw that near 45. Given that this time around it only touched 32, it looks like there is still a bit more to go before we could get at least a multi-day bounce.