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S&P500 Expert Lounge Update – May 8, 2018

Good morning everyone,

These are key MA levels:  5EMA 2651, 10DMA 2651,  20DMA 2663, 50DMA 2679, 100DMA 2705, 200DMA 2616

These are key Fib Levels:   2905, 2774, 2649, 2637, 2587

These are key primary and intermediate levels: 2871(primary minor), 2817(intermediate minor), 2779(primary minor), 2765(intermediate minor), 2651(primary minor), 2577(intermediate minor), 2563(intermediate minor)

Here is today's market look at the S&P 500 for Tuesday, May 8, 2018

We have another light data day in store with only the Feds Redbook at 8:55AMEST, and Job Openings and Labor Turnover Survey at 10:00AMEST.  Yesterday found the 2684 level and 50DMA that was considered to be the most probable outcome last week given the market structure and we have since sold off and generated a new intermediate pivot marker.  The current price for the overnight has us gapping below rising support and the 20DMA.  The next target for sellers is the 10DMA and primary minor level near 2650.  Should sellers be able to break the 2650 to 2640 level it is highly probable a swift decline ensues through the levels void and to the 200DMA at the very least at 2620, but more likely a run back at the previous intermediate minor pivot at 2595.  Good luck today!

Primary and Intermediate Levels Detail

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

 

Happy Holidays & Market Projection Update

We wish you a Merry Christmas and happy holidays and a successful 2016 to come. 2015 has been an interesting year for MCM and we will do a review of our successes and failures things with improved, and weaknesses and strengths. Overall, as can be seen from the chart below market structure projection has been one of the strengths, and it has successfully projected the market out for many months now. These projections have not changed as they are rendered in the charts and remain relevant to market behavior. Weakness projected into [5] bounced as expected and began the latter part of a Santa Claus rally. The strength of the drop that occurred last week did not fit into the resolution of the weekly projections. However, if you do look at the daily projections which are the white lines at the bottom the chart you can see the morning to morning weakness that showed up during those days. Again, these renderings have not changed and remain relevant. This coming week as a potential to be a pronounced decline. For the January effect for this year, the average closing gain for the year is -9% or so. While we may not reach -9% next week has the potential to take us significantly towards this direction and caution would be advisable. This is certainly NOT an options being presently seen in popularity on the internet as most Elliott wave and technical analysts are distracted with triangles which in this analyst's option are way too obvious and accepted to follow expectations easily.

S&P500 Daily and Weekly Market Structure Projections

S&P500 Daily and Weekly Market Structure Projections

Again, we wish you a very merry and safe Christmas and look forward to seeing you in the new year. Please come back to see our year-end review mentioned earlier in this post which will be posted soon.

Weekly Cycles Are Just Turning – Needing Time to Resolve

Last week was a tough week for risk assets as expected. The next few days are key as ideally timing for a bounce exists this coming week it is possible, however, this cycle inflection point can right translate and a turn from down to up may require more time. The reason for this is that we are now in the acceleration phase of double downward running correction breakouts. On a conservative basis, timing should be for Tuesday or Wednesday for a low. However a caveat implies that those "short" should consider trailing stops down rather than exiting shorts on any further weakness. Below is a chart of the weekly cycles - the turn has only just begun as per the rejection of the magenta resistance cycle - additionally, the cycle direction study is only just now beginning its reversal downwards and will require, at a minimum, a few weeks to reach the zero bound (See [1] and [2] on the chart). There will likely be bounces within any such move however, it appears that the market can easily reach the running correction targets of 1,940 or 1,800.

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.

Weekly Cycles

Weekly Cycles

While we do not have sufficient data to build complete MSP on the HIGH YIELD asset class, there are some worthwhile observations which could be troublesome. While we are not comfortable with MSP setup for HighYield enough to publish it - here are some general observations: market structure projection on a broad basis pointed to normal probabilities starting last week into the Christmas time as among the most positive of the year. This is interesting, because when something deviates significantly from MSP then it's often likely something serious is going on. So far. is that is appears people were attempting to be set up for this potential strong upward move for HighYield and are presently getting stopped out. When people get trapped in trades and the market does not cooperate, things can often go as strongly opposite as they would be expected via MSP to go based on probability because people are caught by surprise. Technically, the MSP setup bullish for HighYield into Christmas, however, IF we have inverted and turned buyers into trapped sellers hungry to get out - then it is possible weakness can continue in HighYield until Christmas. We currently appear to be contradicting the probability projections of MSP for strength for HighYield - this could be A BIG PROBLEM if participants become trapped.

Projections for Bounce Sometime Next Week in DAX

The DAX market has tracked MSP well and is looking for an interim balance into Christmas starting sometime next week. As has been posted throughout these pages by breaking below extremely strong capitulatory emotional selling extremes (X-Ticks) via eTickTools on a pervasive basis the markets triggered behavior unlike any that we have seen since before the August crash - putting it at potentially grave risk. IF NO BOUNCE OCCURS NEXT WEEK THEN THE IMPLICATIONS ARE DIRE. This has serious implications for the US markets as well as the DAX tends to lead the US equity markets and S&P500. It is, therefore, with the most concern and hope that we look for the markets to reward the low liquidity seasonality into Christmas with a win. However, the negatives are also pervasive in that NO analyst we see is really looking at anything other than upward triangles, falling wedges and wave 4's. We do not believe the equity market as a whole will be seeing new highs anytime soon - contrary to the very bullish general expectations it seems in the analyst space.

DAX Market Structrue Projection

DAX Market Structure Projection

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

DAX Initial Down Move into January Begins

As with US equities. Mid-December is key for the DAX market as well. Downward pressures amid the seemingly omnipresent bullishness surrounding the Santa Claus rally have not only appeared for equities and bonds as we have projected on these pages, but also for the DAX. The DAX is likely entering a much stronger downplays than the US equity markets in that initial phase appears to have kicked off, which will you yield to some sort of bounce towards the end of January. Downward pressures. Overall next year for the DAX appeared much stronger and persistent then for the US markets. In the meantime. As with the US markets they bounce into Christmas from the middle December likely. However, diverging from the US markets be aware that there is significant potential for a very weak last week of the year.

DAX Market Structure {Projection

DAX Market Structure {Projection

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 

Update on Bonds Turn Window

In response to a question about updated MSP on bonds, below is an MSP chart which represents the bond behavior is on target, and tracking. Probabilities would favor a turn near-term and it is important to watch the white daily line for daily direction opinion. With this line a series of days of weakness may show up as a drop but the goal of this is the only project the oscillation for each day from previous morning to the next morning - therefore we can see that there was upside bias into this morning which should lead to downward bias to tomorrow morning. Either way, it appears we are in an important area for bonds.

US Bonds Market Structure {Projection

US Bonds Market Structure {Projection

Updated Projections and Detail Regarding MSP

In this article, we publish updates to the various MSP charts presented on these pages recently. As mentioned previously, there was a bug fix which corrected the significant misplacement of certain MSP points under certain conditions. The comparison and analysis demonstrating this problem is shown below at the bottom of this article. The result of this discrepancy is that the incorrect MSP did not track, but the correct MSP tract as well as one could possibly want. With that, the corrected MSP is showing an inflection point of this week for the S&P 500. Not only that it is showing inflection points potentially building up for the DAX and the bond market. The bond market rally seems to have been a very foreign concept. However, market structure projection got it right so far. Keep in mind, that the most sophisticated work we have done related to the equity indexes and market structure projection is being expanded to many other products - this is a process.

One of the interesting things is that copper and gold, which had a high pressure for a turn in November have not tracked and diverged significantly from their projected behavior. This indicates that something else may be going on, and caution is warranted. In either case, the high probability area for gold to launch a sustained rally appears likely in January.

S&P500 Market Structure Projection

S&P500 Market Structure Projection

US Bonds Market structure Projection

US Bonds Market structure Projection

DAX Market Structure Projection

DAX Market Structure Projection

Detailed comparison of Incorrect MSP versus corrected bug fix

Detailed comparison of incorrect MSP versus corrected bug fix