Posts

Projections Suggest a Significant Turn in September

It has been a wild week or so. We have been asked often recently regarding short-term MSP and why we have not been publishing. The question has been more-or-less: "has the effort of publishing this data ended and is that why short-term MSP has not been published". While it is correct that this data takes a lot of effort to build and is not principally created for the general public - this is NOT the reason that we have not published these data. The reason is that when the markets become as volatile and emotional as they have been, the best thing to focus on is the larger picture and the fundamental near-term emotion and price movements of the markets. Sometimes it takes a few days for the markets to overshoot - which seems to be the case curgently. Markets may be in an altered state of reality...we have been referring to the market being on "METH" the last week or so in the "Lounge". Therefore, we have felt that short-term market structure is more of a distraction then needed and only been referring to it judiciously as it points to highly probable data point inflections and probabilities.

So, what is the bigger picture? It appears that there is a tremendous amount of coincidence pointing to the 3rd and 4th weeks of September. In Gold, the US Dollar, Oil, the Dax, EuroStoxx 50, S&P500 etc...all have confidence for a probability for  a risk reversal in the mid - to latter part of the month into the end of October. Ironically, for risk assets - despite the anarchy going on in the world - there seems to be a predominant bias for a bid in the markets into this coming week - most probably mid weekish. A reaction from these areas are to be most interesting. Some charts have broken down into potential downward impulses and these patterns would usually imply a retest of the breakdown area - which coordinates with the levels charts on the SPX cash posted earlier - suggesting a retest of 2010 at the very low end and up to 2090 on the high-end. 2045 to 2060 SPX cash seem like a serious area to watch. But these price levels have nothing to do with MSP and are just educated guesses.

Another element arguing for further time for upside is that the normal up wave for a 60-minute bar calculated wave is around 155 hours. This would fit well with mid-week. However, given the veracity of the move down a bit more time could be required additionally.

Below are some updates to the MSP charts that cover this probability scenario:

August 30th, 2015 S&P500 Daily & Weekly Market Structure Projections

August 30th, 2015 S&P500 Daily & Weekly Market Structure Projections

August 30th, 2015 DAX Daily & Weekly Market Structure Projections

August 30th, 2015 DAX Daily & Weekly Market Structure Projections

August 30th, 2015 EUROStoxx 50 Daily & Weekly Market Structure Projections

August 30th, 2015 EUROStoxx 50 Daily & Weekly Market Structure Projections

August 30th, 2015 Oil Daily & Weekly Market Structure Projections

August 30th, 2015 Oil Daily & Weekly Market Structure Projections

August 30th, 2015 GOLD Daily & Weekly Market Structure Projections

August 30th, 2015 GOLD Daily & Weekly Market Structure Projections

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