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S&P500 Expert Lounge Update –July 28, 2016

Good morning everyone,

These are key timing for today: 8:30AMEST, 1:00PMEST

These are key MA levels:  5EMA 2169, 10DMA 2167, 20DMA 2145, 50DMA 2108

These are key Fib Levels:  2191, 2186, 2156, 2145

These are key primary and intermediate levels:  2130(minor), 2126(primary major), 2116(major)

Here is today's market look at the S&P 500 for Thursday, July 28,  2016

FOMC came and went without even so much as a hick-up outside of the current trading range surprisingly enough.  Since Bernake has taken a trip to Japan to discuss their 'situation', more emphasis may be put on what they do with their Central Bank announcement in the overnight session this evening.  There are a number of items to hit the tape this morning starting with International Trade and Jobless Claims at 8:30AMEST.  That is followed by the Consumer Comfort Index at 9:45AMEST, EIA Natural Gas Report at 10:30AMEST, and the Kansas City Fed Manufacturing Index at 11:00AMEST.  We have a new support cycle that triggered on the overnight weakness so that should be watched closely as a hint to whether we may make an attempt to break down out of the trading range, until then, play the edges.  Good luck today.

MSP

MSP

Primary and Intermediate Levels

Primary and Intermediate Levels

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

 

Mario Draghi Panic – Gift to Shorts and Bulls – Downside Not Complete

Last week, in a desperate and disgraceful showing by Mario Draghi, the European Central Bank under delivered and then over delivered in the space of 24 hours. Draghi admitted as much in his subsequent interview. Essentially admitting that his announcement of unlimited stimulus was in response to market weakness.

The market appears to want to gap up this Sunday, which is a contrary and signal it is important to understand that latent strength on a Sunday gap up is more of a bearish sign than a bullish sign if it occurs.

S&P500 Market Structure {Projection

S&P500 Market Structure {ProjectionCentral Banker Panic

A Look At October So Far

Daily and weekly market structure projections have provided a decent insight into the markets over the last few weeks. In the chart below, we have shifted market structure projection earlier by a few days. This is tracked well. However, we may be in a larger countertrend pattern such as a rising wedge which would coordinate well with the concept of termination of the pattern towards the end of October or early November. Within this structure is an abundance of skew towards day to day downward price movement. As can be seen in the highlighted box and also the abundance of down projections on the daily MSP. The interesting thing about the daily MSP is additionally that it shows the potential for large spikes upwards within this skew of downwards movement. We have suggested consistently over the last weeks that upward movement may be quick and outsized due to events or Federal Reserve central bank announcements interspersed within a general downward bias. The result of such action can still mean that the market make some forward progress but may be very frustrating to bullish traders.

Daily and Weekly Market Structure Projection

Daily and Weekly Market Structure Projection

Is More – Less? – Central Bank Policy Fears Appear Ready to Create a Large Quanity of LESS

Confusion over central-bank policy, financial system leverage, economic stability/prospects and impacts of quantitative easing, have created volatility and triggered an epic short squeeze. As confusion reigns and bulls become bullish they may attempt to attribute advancing prices to fundamentals or to expected central-bank policy for support. However, it appears that the US Dollar may find a bottom sometime this month and rally strongly into January. The initial start of the dollar rally appears likely to be composed of something of a shock. The question is will the markets believe it? Additionally, for this analyst the question is "will the markets be able to deal with it?"

Near-term, however, it is important to state that equity markets are poised for a pronounced decline for a week or possibly more which may be arrested at that point and rally again towards the early November.

US DOLLAR Market Structure Projection

US DOLLAR Market Structure Projection

Support and MSP for What appears to be a Pivotal Week Coming Up

With the obvious situation impacting the world of total disintegration of central bank cooperation - to expected effect, we now have the addition of extremely high pressure on Chinese investment firms and institutions to sell everything that is not glued down and that is NOT a Chinese asset. If they can not sell a Chinese asset or share without going to jail the next best thing is to apparently blow it up and also to sell non-domestic assets - such as US stocks, European Stocks and anything else that is not glued down that the Chinese officials will not arrest them for. If this capitulation is to continue things can get very messy indeed. But before we throw out the baby with the bath water, let's take a look at what the markets would be expected to do if the third transaction type for fund managers were not "BLOW IT UP".

DAX and Euro Stoxx are at inflection points and can start a large rally and by the looks of things, would potentially be very painful for shorts. Longs are already in pain and it seems they need to sell too just so the pain is shared more equitably. Funny how that is centrally planned. But in any case, there appear to be quite a lot of influences coming up that imply a convergence to the upside that by the looks of things could be swift. IF we can not get the hint of some traction to this structure, then it should be apparent that the brakes are not working and likely the ground is moving which could imply a "crash". Crashes are rare, even though this feels like a crash already, nonetheless, the urge to get emotionally involved in a crash is not usually a highly rewarding one and caution is warranted. It is common for us to stress that most money earned from trading is not on huge winning trades but on normal base hits. We have worked very hard to increase the odds on base hits and to be open to larger trades when they happen. We also have worked hard to developed tools and approaches to handle a crash or very powerful trend. However, it must be restated that smart and judicious trading is far more rewarding than big winners followed by a string of many losses of arbitrary size - usually larger than the large winners, though. This is why we can not overstate that the potential of this change in psychology in the markets will take more than a few days and the opportunity has not even started yet...patience and restraint are highly rewarded. Buying multimillion dollar jet planes before you've closed what appear to be gigantic winning trades is equally unrewarding. So, in all the lessons we can reinforce, patience, discipline, and clarity is key NOW.

Below are various charts that may help put some perspective on where the market is standing. On the Historical eTickTools Emotional Extremes - Support and Resistance Chart note, that one fo the objective is to show thin zones and also to show areas of congestion. Brighter or more intense colors indicate stronger influence, Light colors indicate previous resistances and darker colors are previous supports.

Historical eTickTools Emotional Extremes - Support and Resistance

Historical eTickTools Emotional Extremes - Support and Resistance

DAX Daily And Weekly Market Structure Projections

DAX Daily And Weekly Market Structure Projections

Euro Stoxx 50 - Daily And Weekly Market Structure Projections

Euro Stoxx 50 - Daily And Weekly Market Structure Projections

Oil - Daily And Weekly Market Structure Projections

Oil - Daily And Weekly Market Structure Projections

US Dollar - Daily And Weekly Market Structure Projections

US Dollar - Daily And Weekly Market Structure Projections

Intraday Projection: Deferring to the Larger Picture

Be warned today can be a tough one for the bears during the day session. One needs to prepare for that. Today is a more or less modal situation around the open. If we reverse any strength into the open - probabilities prefer down into 1:00 PM (with possible acceleration at 2:30 PM) or the reverse. Keep in mind that a move today could become persistent.

On the bigger picture front, Daily Market Structure Projection, as posted last week, indicated a turn Tuesday AM from an upwards directional movement to downwards movement. This has occurred. Today probabilities were also for a lower AM session than yesterday AM. This has occurred, and the condition is met. The largest potential downside momentum in terms of points is suggested with a down AM session into Thursday AM. This can be pronounced and test the 2065 to 2044 area if it wishes. Be aware that we are likely entering another central bank bubble blowing contest and may take an intervention attempt and classically like all central bank activity - will be over done. So, move into early September from a potential central bank panic this week may be torture for shorts and, ironically a windfall for a only a few days for longs who will likely have similar frustration in reaction to it. Strong drop after first weeks of September.

August 19th, 2015 Intraday Market Structure Projections

August 19th, 2015 Intraday Market Structure Projections

Daily & Weekly Projections – Approaching a Bounce Point

If you are a regular reader then, no doubt you are aware that last week several times it was mentioned that strength was expected into Monday AM with two days of weakness which we felt would help clear up the near-term picture. That it certainly did. We remain on target for a wide range chop into early September - so within 140 points range that the S&P500 has been in. Be aware that a large ramp appears to have the potential occurring from the bottom of this range as central bank malfeasance reaches even more epic and delusionary proportions. Best approximation is that weekly MSP (Thick Magenta) shows mild downward pressure into next week...so, most likely this will be key to watch. Is is quite reasonable at this time to expect a real test of the 2044 SPX cash price supports. - if so, into next week seems likely.

August 12th, 2015 Daily & Weekly Market Structure Projections

August 12th, 2015 Daily & Weekly Market Structure Projections

A Look at the Bigger Picture

The grind up last week and early this week was horribly executed and very low-quality participation and a clear price anomaly. In such a situation, when the markets go off course, as happened in November last year to similar central bank brinksmanship, the daily (White) and even the weekly (Magenta) MSP may show divergence to market patterns. The concept behind all of our tools is to represent market facts/directional probabilities, so when MSP diverges from actual market activity in a significant way that is as good information as when the market follows its structural metronome.

We still need to fulfill the potential of the weekly directional projections which go forward into mid-August and that pressure has now reached a very high impact potential for the markets. Below is a general idea of what MSP is seeing. Keep in mind that the basis for daily MSP is NOT cash session close to cash session close - it is morning session to morning session based. Additionally, as with all MSP, the size of a move in points should never be assumed - the utility here is only helpful in understanding the market metronome

July 23rd, 2015 Daily & Weekly Market Structure Projections

July 23rd, 2015 Daily & Weekly Market Structure Projections

Short-Term Projections – Look Out Below

Yesterday was an exceptional day. Good and bad. Sloppy market structure caused by constant emergency central bank interventions all over the world have made the markets a bit more unpredictable than usual. However, Timing, eTick-Tools and MSP  all worked very well and the Gold projection was tracked very well into 2:30 PM timing drop and bounce into the close. In addition to getting Sell extremes at the lows -  before the close we alerted in the lounge that the overnight session favored an upward bias that could be significant. Certainly at this time it was not obvious that strength would be to new highs. This is important to understand, market structure is designed to project timing and directionality NOT scale of price movements. It is easy to want to ascribe relative size movements to an MSP chart - however, it is important not to do this.

For example, the weekly MSP projects down for the next 4 weeks or so. Looking at the chart (posted previously - not shown in this post), it would be easy to ascribe a 120-point drop for the ES from it. However, the implications are directional - a drop could be 40, 60, 120, 240 points or anywhere in between.

Today's strong overnight activity could well lead into another short capitulation which would be indicated on the Red projection below. The Gold market structure projection (MSP), is equally probable at this point. Probabilities, however, are not positive for the outcome of this action and favor a pronounced downward bias into 2:00 PM with likely acceleration into he close thereafter.

July 16th, 2015 Intraday Market Structure Projections

July 16th, 2015 Intraday Market Structure Projections