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S&P500 Expert Lounge Update – March 22, 2017

Good morning everyone,

These are key timing for today: 10:00AMEST, 1:30PMEST

These are key MA levels:  5EMA 2363, 10DMA 2368,  20DMA 2370, 50DMA 2332, 100DMA 2276, 200DMA 2211

These are key Fib Levels: 2371, 2366, 2326, 2315

These are key primary and intermediate: 2401(intermediate minor), 2381(intermediate minor), 2355 (intermediate minor), 2275(intermediate minor), 2254(intermediate minor)

Here is today's market look at the S&P 500 for Wednesday, March 22, 2017

Good morning everyone.  Currently the red and magenta MSPs are tracking the best through the overnight so look for choppy marginally upward biased price action on the day.  Data is light again today with the FHFA House Price Index at 9:00AMEST, Existing Home Sales at 10:00AMEST, and the EIA Petroleum Status Report at 10:30AMEST.

MSP

The technical picture saw us put in our first 1% down move for 2017 ripping through the shorter timeframe DMAs and the intermediate minor level at 2355.  We currently sit at symmetry for the move down from the all time high with the first leg being 1.9% and this current leg being 2% as marked by the cyan intermediate pivot markers.  This current leg is searching for a bottom denoted by that same cyan pivot marker, so sellers need to be careful.  This fact coupled with both systems taking long trades at the close yesterday gives decent probabilities to a bounce of some kind in the very near future.  Good luck today!

Primary and Intermediate Levels

MCM Market update for week 43

Happy Halloween weekend everyone.  This weeks update is going to take a top down approach in an attempt to ground everything and get a good look at the forest and focus a little less on the individual trees that comprise it.  On our run up from the 2009 lows you can see that we've broken from the sustained uptrend at magenta which gave us our first substantial correction since the 2011 lows.  The vast majority of analysts are quick to declare a new trend is under way after a rally or decline begins simply as a function of near term price action.  This is a mistake.  Large trend moves take time to consolidate as expectations change among investors.  These periods last just as long as the trend periods if not longer.  At present, we are about half way through such a period as we traverse across the blue channel from the upper bound to the lower.  Now while the 400 point range from 2200 to 1800 seems massive on an intraday basis, it is relatively minor in the grand scheme of things.  The cyan cross sectional channel is important as we cut across the larger blue channel because it defines price zones.  Maintaining trade above the upper level lets you know that buyers conviction in future prospects of higher prices is strong.  A failure of the upper bound of this channel is a hint that conviction is likely in the process of waning and a larger move back through the previous consolidation zone is likely underway.  Since price has traversed this cyan channel area multiple times in the past it acts as a vacuum because all the levels but the most recent have been broken through and resistance to price change is weak.  With that being said, it is a reasonable assumption that any sustained trade below the upper bound has a high probability of price finding the lower bound in a relatively short period of time before making its next trending longer term decision.

SPXLT

S&P 500

Taking a look at the closer term picture via the cycles, we can see that the market has not decided yet which way it wants to go. The weekly cycles show supports triggered, which have a bounce as normal expectation, while the daily cycles show broken support on ES and a fresh resistance on YM, which point down. The triggered levels on both time frames are critical to watch therefore since whichever break first will likely indicate a bigger move.

The weekly show a change compared to the previous week. The supports which triggered on ES and YM were reset and are now triggered again. This is a very rare occurrence and it happens only when a level (support or resistance) is triggered and something changes at the end of that bar, before confirming, that makes it not confirm. This only appears when the charts are reloaded which is why it was not seen immediately. In any case, the currently triggered support levels do not change the picture. The only difference is that the support triggered by ES is higher and is a bullish retrace (BR), meaning the impulse up is still valid. Also, because it is close to the break-out level it has higher odds of holding, but the conclusion is the same: a bounce is the normal expectation.

Weekly Cycles

Weekly Cycles

As mentioned, the daily cycles are showing exactly the opposite. ES broke it’s support level and although it didn’t break down and the impulse down wasn’t confirmed, it is a sign of weakness. YM is in a confirmed impulse down and it triggered a 2nd bearish retrace (BR) resistance level which normally would need a 2nd END support lower.

Daily Cycles

Daily Cycles

 

S&P500 Expert Lounge Update –September 13, 2016

Good morning everyone,

These are key timing for today:  9:30AMEST, 3:00PMEST

These are key MA levels:  5EMA 2158, 10DMA 2163, 20DMA 2173,  50DMA 2167, 100DMA 2122

These are key Fib Levels:  2142, 2135

These are key primary and intermediate levels:  2176(intermediate minor), 2155 (intermediate minor), 2131(intermediate minor), 2126(primary major)

Here is today's market look at the S&P 500 for Tuesday, September 13, 2016:

Consolidation looks set to continue through the day session from the overnight with the magenta and cyan MSP best representing the price action up to the time of this writing.  Price action at the open should be the deciding factor as to which path is most probable, so be wary of the 9:30AMEST timing window.  Another quiet day with regards to economic data with only the Redbook release at 8:55AMEST.

MSP

MSP

The historical extreme's chart worked wonders again as we reentered the void and raced all the way back up to the newly formed levels up near the all time highs where it found resistance again.  Please be cautious with positions in the empty zone because as we've seen over the past two days, price has the ability to traverse this area in a very relentless fashion.

MSP

Historical Extremes

As noted yesterday, the Primary Major level was overshot before catching a massive bid off the 100DMA.  This overshoot serves as a warning that price has a good chance of retesting levels below there in the not too distant future.  We are still in the early stages of the seasonally weak period which adds weight to the notion of potentially lower prices.  Good luck today and keep an eye on market open timing.

Primary and Intermediate Levels

Primary and Intermediate Levels

 

Immediate Future is NOT favorable for BULLS

This is a quick post to show a variety of MSP charts. All of which point to the immediate area and immediate timing is the beginning of an episode that lasts for several months. There course will be bounces in this decline from our present inflection point. Towards the end of January and towards the end of February or two points to look for bounces in a larger rally in March. Meanwhile, back to business at hand, below are charts of the current detail and close up view for the S&P500, also some overview that shows a preponderance of probability also converging presently as per totally independently calculated MSP for the DAX and Russell 2000.

Happy New Year and wishing you a healthy, happy, safe and prosperous 2016.

Daily/Weekly MSP Close up for S&P500

Daily/Weekly MSP Close up for S&P500

Daily/Weekly MSP German DAX

Daily/Weekly MSP German DAX

Daily/Weekly MSP Russell 2000

Daily/Weekly MSP Russell 2000

 

Yellen - Why Is It Not Working?

FED Speak, FED Hike, FED Squawk – Some Disccusion

Yesterday we posted these comments regarding the FED:

Another anecdotal issue is that the FED is due to report their unbelievably tortured analysis and process geared to raise interest rates by only 25 basis points. However, at this point the FED credibility is pretty tattered and IF they raise interest rates they will be viewed as non-data dependent to the contrary of their propaganda. If they do not raise interest rates they will be show that the verity of their analysis and policies is likely sorely lacking. In either case, the best the FED can do is damage their credibility or damage it more. Not particularly wonderful outcomes and for the markets this could imply that no matter what the FED does will be received negatively.

Yellen - Why Is It Not Working?

Yellen?

It is worth noting that if things get too challenging in the markets, the Fed may decide not only "no hike" but QE and effectively "rate cut". This woul be data driven of course and all in the span of less than 2 weeks of data. The question is would any new QE solve the problem? While there is no reason to doubt that a rally on some QE announcement would occur, the problem is that we are facing liquidations of malinvestments. As in 2010, after the initial rally in equities, QE funds and liquidity sought an avenue for allocation - the chosen allocation was not previous dubious products - and did not immediately go into equities or bonds - it went into commodities.  This caused dislocation in the commodities markets with many commodities rising hundreds of percent in a very short time - which in turn caused the "Arab Spring" (which was no "spring" but rather a revolt by starving citizens) as many poor and middle-class Middle Eastern people were unable to afford necessities of rice and other foods. They were forced to choose between buying food or paying rent. Similarly, were sitting in the situation in which junk bonds need to be liquidated and QE liquidity would not be allocated easily to junk at this time. Therefore, the only option for the Fed, which this analyst feels would further damage their credibility, would be for the Fed to directly purchase declining assets and junk bonds. Certainly, the FED can purchase junk bonds and represent them on a portfolio at par as they have done with many of the bankrupt entity debt that that they purchased in 2008 and 2009 (Maiden Lane III Portfolio) - but this does not inspire confidence.

So, in summary, it appears that if damage becomes pronounced to the equity and debt markets now or int he future theFed may need to attempt to directly arrest it. However, their tools are not precise and not effective. Moreover, they would be seeing as hypocritical because how could they not see this coming, and, in fact, want to do a rate hike just before major damage to bond and equity markets would occur. Either way, the situation as it seems to this analyst, is a no-win outcome for the Fed, no matter what they do. The best probable scenario that likely exists is that the Fed just buys every asset that is going down and attempts to arrest decline by increasing the balance sheet further and also deteriorating its quality.

Is it really possible, that if these options are even on the table? And would they work or make a difference for more than a short time?

Treasury Projections – Tracked Almost Perfectly – Appears Things Are About to Get Ugly

Recently posted microstructure projections treasuries, which were right translated two and a half days. The direction and timing of tracked in stellar fashion and we are still looking at a decline in treasuries into mid-December. Key turn dates to watch come in around the 15th. One of the most interesting things that appears to be happening is is that the direction of treasuries and equities are syncing. People in general are not used to this relationship and expect that treasuries trade upwards when stocks trade downwards. It appears that the synced and correlated behavior between equities and treasuries may continue into next year as both suggest weakness into February. It is possible that as equities start to accelerate into the completion of a down move that is possible into February and March - that treasuries suddenly decorrelate and start trading inverse to stocks once again. This is an interesting trap and it is also something that we have seen repeatedly with these central banker distorted and manipulated markets. Disparate markets all of a sudden start trading due to liquidity or manipulation or imbalance in the same direction and then when liquidity stresses change start trading in the opposite directions. This is happened countless times with different currencies vs. different commodities in different equity risks just as investors get used to the relationship the relationship changes. This is something to watch for in the behavior of treasuries, which appear to be linked at this time and for the foreseeable future with the prices of equities.

US Bonds Market Structure {Projection

US Bonds Market Structure Projections 

Inflection Points Expected This Week – As Market Operates In Its BEAR MARKET CYCLES

This weekend we will present a host of unique charts and a detailed discussion of market structure projection, which had a software issue related to the end of November timing for a low - which actually due to a rare condition forward translated erroneously skipping the correct mapping for the week so the 16th. We identified this early last week and updated members, as soon as it became clear that future vs. historical MSP was not agreeing. This bug/error has been fixed and will be discussed in a separate post. However, inflection points are expected imminently if not already in.

The cycle study shown in the large chart below (you will need to maximize or zoom into the chart to see the details) is a robust and proprietary analysis that we use in our proprietary trading systems. The objective of this study is to devine the direction and timing of market movement by backing out its natural oscillations - or waves. As can be seen in the chart below, the red and pale cyan studies at the bottom of this chart show the larger directional move in the markets. They show when a market is trending by magnetizing to the upper and lower bounds. This means the 100 and 0 levels. Persistent travel at these extreme bounds indicates a trending market as well as the direction of the trend. When markets attempt to change course, a period of questioning is required. These market questions show up as volatility or could be called CHOP. We are currently in a pronounced stretch of zero bound attention which usually occurs once a change direction has successfully occurred. These tools defined the change of direction in June and July this year from UP to DOWN and likely into a bear market. They could not have had better timing. The objective of these analyzes is non-latent and simple, we think that this has been accomplished in the chart we publish on this page.

Additionally, there is another condition occurring similarly to 2007. While it is not our objective to show systematic trading as an indicator. The RVS is an old and established trading system that has unique qualities currently potentially acting a bit like a larger-term indictor. RVS trades only with what it feels is the prevailing trend. During the last five years. While it has had many losing individual trade elements. It has scarcely had a losing model position since 2009 and its releases in 2010 and 2012. This means that every position, including all the entries required to build a position on an NET-BASIS, resulted in a profit this makes the system stable and persistent which is why we trust it and have not changed anything about it in years. Due to the characteristic of the system's trading only in what it perceives to be the prevailing market direction it believes most probable...and its ability to trade profitably and consistently through whipsaws that usually accompany changes in direction in the market, this system is now setting up a pattern almost identical to 2007. Within the cycle analysis, we are presently likely in initiating bear markets, similar to 2007. As such, RVS believed we were in a new bear market starting in July and profitably shorted (albeit small) the September and October bounces. The reaction of the markets since then has created the perception that the Bull-Is-Back. This can be seen via the many Elliott wave counts and technical analysis calling for new highs, dramatic or astronomical new highs. We believe that most of this analysis is founded in an emotional basis and lacking reliable or factual data.  This reaction the markets also has so far attempted to convince RVS that longs are the preferred trades. If the expected inflection points play out and the cycle directional trend analysis is accurate, this phase for RVS should become a similar whipsaw as in 2007 and regardless of if markets make new highs (as in 2007)  the system should soon revert to a preferred bias towards short risk.

RVS & Market Cycle Study

RVS & Market Cycle Study

MCM Newsletter – Outlook for Week 2-6 Nov

For the benefit of the general public, considering that we are approaching an important inflection zone, we will keep this post open, however the future weekly newsletters will be limited to members.

Executive Summary:
- Main Trend (weekly): down
- Intermediate Trend (daily): up
- Short-Term Trend (60min&135min): up
- MSP for the week: up

Details:
No significant change in the weekly cycle compared to the previous week. The impulse down which started in week 35 is still valid - the price sliced through the support level which triggered at 2061.75 ES and 17353 YM (point 1 on the chart), confirmed afterwards by the MCM MA (which also came down through the mentioned level). That means that the main trend is still down. Compared to last week, the price advanced a bit more above the break-down levels (point 2 on chart), however not significantly enough and the current movement would still qualify as a back-test of the down impulses. The past week did little in terms of confirmation, so we are looking to next 1 week, possibly also the week after, to either confirm the main trend down or a reversal.

Weekly Cycles

If the weekly cycles did little in terms of confirmation, the past week brought a significant development on the daily cycles. Namely the MCM MA confirmed (point 2 on the chart) the price break-out (point 1 on the chart) above the resistances triggered at 2015 ES and 17100 YM. That means that the cycle impulse up on the daily is confirmed. The impulse is still at an early stage, and it can be reversed, especially considering the weekly development. Which is why also on the daily what happens next week appears to be of critical importance for the intermediate term direction.

daily_1.11.

Daily Cycles

The 60 and 135min cycles added even more nests to their upward impulses, by breaking above the END (or 2nd END) of their previous up impulses (point 1 on the chart). Currently the 60min has put in a capitulation bar (yellow bar on the chart) with a support level right at the lower end of the bar at 2069.5 (point 2 on the chart). Interesting is that 135min has resistance turned support very close, at 2066.75 (point 3 on the chart) and if we bounce higher from here, this would qualify as another back-test of the up impulse generated there. So very short term a bounce is the most likely option shown by the 60 and 135min cycles. If the bounce does not materialize and we break below the indicated levels, that would be important since it would reverse the impulse up on 135min and generate an impulse down on 60min (after MCM MA confirms).

60&135_1.11.

60&135min Cycles

The MSP for next week points higher with a significant inflection point coming up if it has not already occured. After the market peaks there is MSP bias for weakness over the next 3 to 4 months. When pointing out inflection points in the long term MSP it is important to mention that + - 3-4 trading days would be considered close enough. Friday is shown on the MSP as the peak, so we can conclude that the likely top is sometime in the 2nd half on next week or, if it's later, in the 1st half of the week after.

Recently the markets have been leading/left translating their peaks and the market IS presently in the window for a turn...it is not the objective of MSP to pick the exact hour and day of an inflection point but rather to point out a region of probability - be alert to any clues that a turn is occuring.

 

1.11.ES_MSP2

Market Structure Projection

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.

Reprise of 2007: Bear Impulses Down Likely to Accelerate

The markets are in frail shape. Friday's activity was particularly disturbing in that the markets could not even get the strength to use a prime setup and structural setup to squeeze bears. Markets made a swift reversal out of Buy Extreme resistance starting around 1:00 PM and never really looked back. While a continued bounce is possible very near-term (not that we are saying is likely or favored since probabilities are leaning the opposite currently), longer-term MSP and Daily MSP all suggest downward probabilities for the near future as has been consistently posted regarding this time frame on these pages. We thought it would be, considering the potential impulsive cycle activity developing in the markets, important to look back at the 2007 and 2008 period and topping process via several charts as published below:

2008 Daily Impulse Cycles

2008 Daily Impulse Cycles

2008 Weekly Impulse Cycles

2008 Weekly Impulse Cycles

2015 mcm Hindenburg Omens

2015 mcm Hindenburg Omens

From our post regarding the Janurary Effect in May 2015:

The 2015 January Effect: Status – On Track

Early in the year, we decided to do the most thorough study of all the behavioral and market structures possible to confirm or deny the veracity of the January effect. The resulting study produced the "MCM January Effect Model" with very interesting and powerful results.

The chart shown below puts a dim light on the outcome of this year. The rest of the report produced rather stunning results and to our surprise, proved that using a structured approach to a January effect could reveal market behavioral tendencies that are WAY beyond question concerning validity. Some data outcomes produced 96% win or loss rates with 60 to 70 plus qualifiers in the samples. This means 57 to 67 valid winners/losers out of 60 to 70 fulfilling observations.

This report is being refactored and will be available to members when that process is complete. Meanwhile, the data shown below sheds interesting color on 2015. Though there are a low number of observations out of 100+ samples, the methodology we used we feel is highly reliable which makes these outcomes something not to be taken lightly. Ideal turn timing is mid June to mid July.

So far, the year is tracking all the expectations pretty much as posted on these pages. Note that we have been consistent, not flipping our analysis since our first posts this year. We believe this is a significant difference from most analysis work that we have observed. The reason we are pointing this out is NOT that we need to take credit for acurate analysis during a challenging time for the markets as well as analysts - but rather because the advantages of objective, non-traditional data and structure centric analysis provides more relevant and valuable answers - it's just that simple. Even if such analysis is incorrect, its is still highly relevant because, as a basis, objective, and "fact-based" probabilities can be assessed. Failure to achieve them can be as important as achieving the probabilistic outcomes.

We have consistently posted the mcm-Smart Money Indexes, which have continued to deteriorate and most currently sit at 2009 lows - this is a decidedly troubling and challenging hurdle for the markets to heal as there has been a vicious sell-off going on for much longer than headline prices would seem to indicate.  (see:Drama in the Market Seas and Eye of the Storm: Smart Money Indexes Obliterated)

mcm Smart Money Indexes

mcm Smart Money Indexes

Currently, market facts are NOT FAVORABLE near-term and do not turn for several weeks.

The larger patterns hearken to rhyme with 2007 and 2008 and most certainly call for heightened caution. Central Banking may now have to start focusing on other issues than propping up the stock markets prior to their voyages into destabilizing negative equity as referenced in our IMAGINARY NUMBERS series.

If the impulses that appear to be setting up gain traction there could be quite a lot of damage done in a short amount of time. The primary hope for markets is to bounce NOW to better test the cyan impulse cycle breakdowns or they will most likely require weeks of downward price movement to dissipate downward energy sufficiently as to be able start a better recovery attempt. This is also supported by MSP directional projection probabilities suggesting that after mid-month in October the market is likely try to find footing for a significant upwards effort. Below are current impulses cycles that have been setting up:

2015 Weekly Impulse Cycles

2015 Weekly Impulse Cycles

2015 Daily Impulse Cycles

2015 Daily Impulse Cycles