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S&P500 Expert Lounge Update – June 2, 2017

Good morning everyone,

These are key timing for today: 11:00AMEST, 2:30PMEST

These are key MA levels:  5EMA 2420, 10DMA 2413,  20DMA 2400, 50DMA 2378, 100DMA 2354, 200DMA 2269

These are key Fib Levels:  2459, 2429, 2411, 2400

These are key primary and intermediate levels: 2410(intermediate minor), 2404(intermediate minor), 2383(intermediate), 2374 (intermediate minor), 2355(intermediate minor), 2345(intermediate minor), 2326(intermediate minor), 2255(intermediate minor)

Here is today's market look at the S&P 500 for Friday, June 2, 2017.

Happy Friday everyone!  With current price action odds favor a weak to flat day via the white MSP.  Data is light today with only the Baker Hughes Rig Count remaining at 1:00PMEST.

MSP

The technical picture took a turn in the favor of buyers yet again yesterday with a breakout over the broadening resistance which now resides in the 2425 area.  Basing on this area on a pullback is a clear warning that higher prices are coming and most likely in a runaway fashion.  On the flip side, a break of the rising support sets up a high probability of a retest of the next nearest intermediate minor level at 2410.  Good luck today and have a great weekend!

Primary and Intermediate Levels

mcm Market Update for Week 44

The action over the past week was decisively bearish. The market continued the downside movement started 2 weeks ago and declined in all 5 trading sessions reaching a 70 points decline in 2 weeks and more than 100 points lower vs. the August and early September peak. Continuing the bearish signs, the market broke decisively below the trend line connecting the last significant lows (the one from February and the one from June). But of course, the real question is: what now? Will the market continue lower or is a bounce in the cards?

Looking at the cycles, we can see the same bearish signs: the weekly support level on ES was broken, despite it having higher odds of holding. YM also broke its support, albeit only marginally (shown on chart). The directionality tool did provide a nice warning that the bounce after the initial decline was not going to hold, by continuing to move lower throughout it. It is currently at the minimum value and if a more significant bounce is coming, it will start moving up. We also have a LRE (lower risk entry) for longs on YM and as we can see in the past (highlighted on chart) these have the potential to trigger a big bounce. A 2nd consecutive one triggering next week will definitely be something to watch for.

Weekly Cycles

Weekly Cycles

As we were mentioning last week, the daily cycles were bearishly inclined and the market delivered just that. YM was in a confirmed impulse down and it had triggered a 2nd bearish retrace (BR) resistance level which normally needed a 2nd END support lower. The market moved decisively lower, so now we are on the look-out for a support level to trigger. ES also triggered (late) a resistance just above the previous support and then a new support lower, which was slightly broken. Going forward it will be important to see when a support level will trigger on YM. That would be a big warning that the decline is at least pausing for a while.

Daily Cycles

Daily Cycles

Revisiting our potential Elliott Wave ending diagonal on the NYSE Composite from previous updates, it is very obvious that we've broken the rising wedge pattern and have begun to sell off.  This brings in a demarcation point where the diagonal structure becomes invalid because in a contracting ending diagonal, wave 2 must remain shorter than wave 4.  We've marked that level where that is no longer the case and at which point we can begin looking for much lower prices as the next viable structure would bottom in the 9600 to 9500 area.  Futures are markedly green at present so a challenge of the upper area of the declining wedging pattern is a relatively good probability at this point.  Good luck this week.

NYSE Composite

NYSE Composite

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

 

mcm Weekly Market Update For Week 37

The past week started just as brutal as the previous one ended. After making a new low on Monday in the overnight session, the market rallied 50+ points from that low. Luckily the mcm tools nailed that low and warned of the bounce beforehand. If you didn't have a chance to read the article detailing how that happened, you can find it here: http://mcm-ct.com/blog/anatomy-of-a-tradable-bottom/  While a valiant attempt was made to recoup some of the previous weeks losses early on this week, ultimately they failed with the NYSE closing roughly 0.75% lower than the previous weeks close.

Monday's action was the highlight of the week, the rest of the trading days being more choppy, with a lot of back and forth typical for sideways action.

The weekly cycles show that the back-test of the 2105 break-out level is ongoing. Market bounced from there, but it's too early to call for a successful back-test and sound the all clear for the bulls. The action in YM is also a warning sign, the price sliced directly through the break-out level and is currently in a direct overlap. The action in the next 1-2 weeks appears decisive for a resolution of the back-test and 2105 is still a very important level and worth keeping in mind.

Weekly Cycles

Weekly Cycles

The daily cycles provided an excellent signal last week also. Namely, Monday's rally stopped almost exactly at the previously broken support sitting at 2154.5. The market retreated from there and then chopped around inconclusively. So it appears that we have what looks like 2 successful back-tests. One on the upside (on the weekly) and one on the downside (on the daily). The resolution of one or the other will paint the medium term picture. In the meantime the 2 levels are very important and critical to keep an eye on (2105 and 2154.5).

Daily Cycles

Daily Cycles

The preferred path outlined in last weeks update on the NYSE tracked exceptionally well despite the massive volatility we found early on in the week.  Currently we are at a crossroads as to whether we'll continue down on the path to 'or 2' or stage a rally from this general vicinity to cyan 3/C/5.  In Elliott Wave there are some requirements that must be observed for the validity of a Ending Diagonal (Technical Analysis rising/declining wedge) structure.  The first which was satisfied with this weeks price action with the overlap of the first and fourth waves.  The second is that the fourth wave cannot be longer than the second wave.  This second criteria is of great importance in this instance as it will serve as an early warning that price will have a greater probability to head to much lower levels if that criteria is broken.  This week is likely to be an important one with regards to which outcome becomes the most probable.  Trade safe.

NYA

NYA

 

 

 

 

Anatomy of a Tradable Bottom

The decline from Friday 9/9 was brutal. After months of range trading to get a 50+ points decline in a single day can be traumatizing, especially if caught wrong-footed playing the long side. In fact it can be so traumatizing that it is hard to even consider longs immediately after that. But the very next trading day, after continuing the decline for another 10-15 points (probably to shake out the last remaining longs and draw in some more shorts), the market proceeded to rally 50+ points from the ES low in the overnight. It is very hard to keep the objectivity when faced with this type of volatility, but one thing the mcm tools definitely have is the fact that they are objective. They are based on real data and when they trigger a signal, that signal is objective. And when signals align... Well, wonderful things tend to happen. The mcm tools signaled the 2100 ES overnight low from 9/12 as a VERY important level with significant support and, as a result, a high probability long.

And here is why.

First off the virtual tick tools signaled the 2100 level as very important. At point 1, around 3:30am it signaled a tiny capitulation bar (yellow bar on chart) and also a selling Xtreme (or sell X, which means there was an extreme selling effort in which all willing sellers have sold). At point 2, around 4:30am, it triggered another sell Xtreme with an Xtick (a sort of super sell Xtreme, to put it in simple terms), which came at the same level of 2100. At point 3, around 7:30am, the market tested once more the sell X and held. At point 4, around 8:30am, the tools signaled a buy X Xtick, with a capitulation bar (red bar), which were broken above. Ever since that break-out, which was held, the market rallied and never looked back.

V-tick tools

V-tick tools

Reinforcing the signal of the V-tick tools, were several cycles which were showing support at the exact same 2100 level.

First off the 1 and 2.5min cycles. For easier reference I kept the time points from the v-tick tools (1= 3:30am, 2=4:30am, 3=7:30am, 4=8:30am). 2.5min had support at points 1 and 2, at point 3 it was in a normal oscillation wave, while at point 4 it also broke out above resistance and started an impulsive wave up. 1min is too fast and the 1 and 2 time windows are not shown. But at point 3 we can see that it also had support, while at point 4 it also broke into an up impulse by breaking above resistance.

1&2.5min Cycles

1&2.5min Cycles

Continuing the story is the 5&15min cycle. At point 1, the 5min cycle had a 3rd END support. That means it was marking the complete unwind of a previous impulse down and likely to trigger a bigger reaction in the opposite direction. At point 2, it held the 2nd test of that level. At point 3 it had a new resistance, but at the same 2100 price level. At point 4 it also broke into an up impulse. The 15min cycles shows pretty much the same story. At point 2, it triggered an END support (marking the unwind of the previous down impulse), then at point 3 it held that level, while at point 4 it broke out into an up impulse as well.

5&15min Cycles

5&15min Cycles

Next are the RSI cycles. Same story again. 3rd END support at 2100 at point 1. New support which held at point 2 and 3. Break-out above resistance at point 4 and start of impulsive wave up. An additional signal was the fact that the CCI (the red line at the bottom of the chart) was diverging at points 1, 2 and 3. Market made a new low at point 1 and tested that level at points 2 and 3, but CCI was going up.

RSI Cycles

RSI Cycles

Following are the Tick Tools. These generate signals only during the day session, while V-tick generate also during the overnight. Right off the open, the tools generated a sell X with a 98% Xtick which was never contested and market proceeded to rally directly from there. No surprise, since 2110 was previous resistance broken above on several cycles and a buyX Xtick on v-tick tools. After rallying from 2110, the market met a buy X at 2125, but broke above and continued to move higher, with the bullishness confirmed.

Tick Tools

Tick Tools

Based on the confluence of signals, 2101 ES was called as a high probability trade in real time in the Expert Lounge here at mcm. The trade was never in danger of being stopped out and once the break-outs were confirmed on several cycles (first at 2104, then 2110, then 2114, then 2125), there was no real reason to exit before netting 30 to 50 points, depending on the exit strategy.

Technical Laboratory Update For The Week Of August 7th, 2016

Hello everyone, this is going to be the first of many weekly updates that I will be doing in tandem with Alex's cycle analysis to help shed some light on general market conditions and potential direction.  The market has remained range bound over the past couple of weeks which some have said is topping and others have said is basing.  From a structural market standpoint both groups have a valid argument.  Our technical breakout over the range on Friday to new ATH's in both the S&P and the ES futures market has many under the impression that our new rally leg up is upon us.  With all rallies, and for that matter declines, it is important that trade is sustained at the new found levels.  In this update I'll identify three potential longer term paths and from there we can assess weekly progression and which path currently presents the higher probability.

 

SPX

SPX

The preferred path at present is the magenta one.  All three of these paths revolve around the 2191 area and begin to diverge from there.  The Elliot Wave label definitions are not necessary to understand, they are simply to identify the type of predetermined structure that could unfold from a given area.  The 100 year presidential market cycle chart that was posted on the board a week ago gives more credibility to the magenta ending diagonal path as that has an upward bias running until the latter portion of August and potentially into early September before we run into more sustained weakness.  (see below)

Presidental Election Year Seasonality

Presidental Seasonality

The longer term MSP also coincides with the idea that August is likely to sustain trade in this general vicinity till the latter portion of the month.  Also of note with this chart is the weakness period through July was more of a sideways move than a decline.  This  could be hinting at underlying strength in the overall trend that could manifest itself into a more pronounced August rally than is presently expected and more in line with the purple Impulsive Wave 3 path in the above technical chart.

LT MSP

LT MSP

Based on both the LT MSP and the seasonality chart, the third option in dark grey of an Expanded Flat Wave 2 is currently weighted as the lowest probability but is something to keep in mind as we progress through the month of August.  Ultimately the 2191 demarcation point is key to all three of the scenarios going forward.  From all of us here at MCM we wish you a safe and happy weekend and look forward to seeing you all in the Expert Lounge next week.

S&P500 Expert Lounge Update –July 8, 2016

Good morning everyone,

These are key timing for today: 12:30PMEST

These are key MA levels:  5EMA 2103, 10DMA 2082, 20DMA 2080, 50DMA 2078

These are key Fib Levels:  2125

These are key primary and intermediate levels:  2126(primary major), 2116(major), 2099(minor), 2086(major),

Here is today's market look at the S&P 500 for Friday, July 8,  2016

Overnight was markedly positive and finalized by what the market deems good news in the employment arena as of this writing.  With the spike from the employment announcement we have capitulation bars on the 5min into the morning highs but would appear to need cycle unwinds there.  The 135 is looking for a 2nd end with this ramp and the 480 is looking to complete a full cycle with an End.  The RSI cycles are currently working on resistances at the highs and a retrace seems like a relatively high probability upon the cash market open.  Good luck today and profitable trading.

MSP

MSP

Primary and Intermediate Levels

Primary and Intermediate Levels

S&P500 Expert Lounge Update – June 13, 2016

Good morning everyone,

These are key timing for today:  9:40AMEST, 2:30PMEST

These are key MA levels:  5EMA 2106, 10SMA 2104, 20SMA 2087, 50SMA 2077

These are key Fib Levels: 2082, 2094, 2098

These are key primary and intermediate levels:  2073(major), 2086(major), 2099(minor), 2115(major),

Here is today's market look at the S&P 500 for Monday, June 13,  2016

A soft overnight session is likely to have us open near last weeks lows especially with no premarket economic data to push price around.  The 5 and 15min cycles have completely unwound so finding a near term bottom in this general vicinity should be considered a reasonable probability.  There is also two LRE's on the daily chart down at these levels and the 60min chart will put in a 2nd end with any strength today.  The system's are hinting at some near term bottoming as of Friday as well with HAL winding down its short and RVS going long.  Good luck today and profitable trading.

MSP

MSP

Primary and Intermediate Levels

Primary and Intermediate Levels

S&P500 Expert Lounge Update – May 2, 2016

Best to your trading & welcome to our new subscribers

These are key timing for today:  9:30AMEST, 2:30PMEST

These are key MA levels as of previous day close:  5EMA 2079, 20SMA 2075

These are key primary and intermediate levels:  2075, 2086, 2060(minor)

Here is today's premarket look at the S&P 500 for  Friday, April 29, 2016

Top of the week to you all.  A relatively quiet overnight session but we did have a 60min cycle bearish retrace at the equivalent SPX 2069 level, so as stated during Friday's session, 2070 is important.  On the data docket we have the PMI Manufaturing Index out at 9:45AMEST,  ISM Manufacturing Index at 10:ooAMEST, and Construction Spending also at 10:00AMEST.  This makes the key timing at 9:30AMEST a particular area of interest.  The RSI cycles have all ran their course for full impulse waves in the overnight.  Couple that with the 60min cycles producing a bearish retrace signal and some consolidation and weakness is a decent probability.  We also need to be mindful of the fact that the historical extreme's for both YM and ES held support, so we will need to be mindful of that going forward.  Good luck today everyone and see you in the lounge.

2016-05-01_20-02-14_intradayMSP

MSP

mSPXLevels

Primary and Intermediate Levels

mHistoricalExtreme_ES

ES Historical Extremes

mHistoricalExtreme_YM

YM Historical Extremes

MCM Newsletter – Outlook for Week 4 Apr – 10 Apr

Executive Summary:
Main Trend (weekly): neutral
Intermediate Trend (daily): up
Short-Term Trend (480&288min): neutral
Details:
Again no change in the weekly cycles. They are oscillating and we are still on the look-out for when the next resistance level will trigger, which would point to a correction until a new support level is found. As mentioned in the previous newsletter, it is also important to watch if the mcm-MA will turn green since that would invalidate the 2 consecutive LRE (lower risk entries) for shorts which triggered a while back. Until then, the LREs are still valid although the market overshot their trigger level.

Weekly Cycles

Weekly Cycles

On the daily cycles, the up impulses are ongoing and are respecting their bullish nature. There has been no significant pull-back in order for a bullish retrace (BR) to trigger, so even if the main trend shown is up, a correction from these levels is not out of the question. Last week we were pointing to some signs appearing, like the directionality tool on ES turning down. That was a failed attempt, since it never got back below 0 and bounced. On YM it never left the upper range, so once it does that will be a warning that the strong bullish trend is waning. The predictive pivot is now lower than the market price too and since it usually acts as a magnet, it also points to the probability shifting to a correction. Once we do get that, the reaction of the market to the triggered BR will be key to watch.

Daily Cycles

Daily Cycles

The 480 and 288min cycles are oscillating and have been doing so for a while. The 288min cycle actually attempted an impulse down after briefly going below the support triggered at 2047, however the market managed to bounce back above it and canceled the attempt. The 480min cycle has resistance as last triggered level and the market is bumping into it again (at 2064.75). Reaction here will be important to watch, together with the reaction on the next triggered resistance level on 288min. The normal expectation is for resistance to hold, of course, and the market to move back down until a new support level is found.

288&480min Cycles

288&480min Cycles