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MCM Newsletter – Outlook for Week 14 – 18 Nov

What a week! It’s hard to keep the exclamations away in a week that saw an intra-day drop of more than ES 100 points to reach a limit down suspension and then a full reversal to come back, open the cash session only slightly in the red and keep rallying to close the day green. It was a Brexit type event, except it was faster. After Brexit we had a big drop, a dead-cat bounce and then the next day the markets made a new low. Now we never got that. Market bottomed in the overnight and then never looked back. People who were short in cash instruments must’ve had a really bad day, seeing the market 100+ ES points down and then opening nearly flat. Which proves once again that a large part of the action has moved outside the regular trading hours. The mcm tools caught the bottom quite nicely, signaling the exact low with a sell X Xtick on v-tick tools and then despite what looked like (and was) a huge bounce, it never triggered a buy Xtreme until the RTH started.
But as always the big question is what now. The weekly cycles put in a very large candle, with a LRE (lower risk entry) for longs at the bottom of it. Both ES and YM spiked below support, but recovered it and we are now looking for resistances to trigger higher. Once that happens, that would be a strong sign that another correction is coming. ES is still in an up impulse which would likely be over once an END resistance triggers. So reaction in the opposite direction could be strong.

Weekly Cycles

Weekly Cycles

Zooming in to the daily cycles, these also spiked below supports and then recovered them strongly. So we have the the same expectation as for the weekly - watching for a resistance level to trigger. We did get some LRE (lower risk entries) for shorts, however the mcm-MA just recently changed bearish (red color) and we can see from such past events that in this case, the LREs are not very reliable. The directionality tool is moving upward and has been doing so for a while, actually since before the “Trump-win” Brexit like event. It will be important to see when it peaks and starts moving down.

Daily Cycles

Daily Cycles

The 288 and 480min cycles both    
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MCM Newsletter – Outlook for Week 21 – 25 Nov

Compared to the election week Brexit type event, last week saw things calming down. Although the intra-day swings in ES were 20+ points in the first 2 trading days and then 15 points in the last 3, that felt like no volatility at all. The market managed to continue to grind higher although the high from the election week was barely overtaken by 5 points.
Considering the absence of major swings, it is no wonder that the weekly cycles saw no major developments. The directionality tool finally bounced from it’s minimum level confirming the ongoing bounce. As previously stated, the cycles now need resistances to come up which would be a strong signal that the bounce is coming to an end. Of course, to anticipate where these might trigger we have to look at the shorter timeframe cycles.

Weekly Cycles

Weekly Cycles

Zooming in to the daily cycles, these also spiked below supports and then recovered them strongly. So we have the the same expectation as for the weekly - watching for a resistance level to trigger. We did get some LRE (lower risk entries) for shorts, however the mcm-MA just recently changed bearish (red color) and we can see from such past events that in this case, the LREs are not very reliable. The directionality tool is moving upward and has been doing so for a while, actually since before the “Trump-win” Brexit like event. It will be important to see when it peaks and starts moving down.

Daily Cycles

Daily Cycles

The 288 and 480min cycles show    
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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.

S&P500 Expert Lounge Update –September 12, 2016

Good morning everyone,

These are key timing for today:  9:30AMEST, 2:00PMEST

These are key MA levels:  5EMA 2158,  50DMA 2163, 100DMA 2121

These are key Fib Levels:  2127, 2139

These are key primary and intermediate levels:  2131(intermediate minor), 2126(primary major), 2115(intermediate major)

Here is today's market look at the S&P 500 for Monday, September 12, 2016:

The market continued its waterfall in the overnight session but with the substantial bounce this morning it looks to recoup a good deal of the earlier losses.  Cyan seems to be the odds on favorite at present with the early morning strength, but keep an eye on the gap and tick tools to see what makes sense at the open of regular trading hours and the coinciding timing window.  Price action will be the primary focus as there are no economic releases to speak of, but there are a few Fed heads to speak.

MSP

MSP

How price behaves around the primary major level will be important to note because it will give clues to what kind of price action we should expect going forward.  A solid rebound from that area will likely produce a more pronounced bounce, but an overshoot to the downside should be taken as a warning that areas below that level will want to be tested.

Primary and Intermediate Levels

Primary and Intermediate Levels

As noted on the historical extremes chart last week during banter in the expert lounge, there was a substantial void between newly formed extremes and the existing.  As soon as selling began, this gap turned into a massive vacuum and traversed the gap very quickly.  Now that we've reached clusters of historical extremes again it is most probable that price will become choppy again.  Keep a close eye on the tools and timing into market open to get an idea of what is in store for the session.  Good luck today!

Historical Extremes

Historical Extremes

DAX – Tick Tools Show the Way in a near 500 Point Drop

Yesterday was a horrid day for DAX. It went up in the morning, when the futures opened and surpassed the 10.000 mark. Actual high was 10.019. And from there it went in a vicious decline to put in a daily low at 9.559. That’s 460 points in just one day!

Now anyone with access to the tools would have been forewarned to pay attention when it counted - at the 10.000 mark. As can be seen, 10.000 was highlighted with a buy X-treme and an X-tick to boot (on v-tick chart). When the market made the high above 10.000, a capitulation bar appeared. Now that’s a dangerous triple combo. And when the market reversed without the moving average getting a chance to get above that buy X, it was a clear sign that market was putting in an important pivot there.

Yet another sign to be cautious on the long side was that the market was still impulsing down on the 15-min and 60-min cycle - from the 10.100 area. And the 60min chart showed a bearish retracement signal at 10.019, which was the high of the day.

Just a regular day in the life of the dax tick tools...

vtick

V-tick chart

60min

60min chart

15min

15 Minute Cycle Chart

The Only Variables We Control: Risk Management Concepts

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S&P500 Expert Lounge Update – August 25, 2015

Our last formal update forebode the breaking of the long term bullish channel on the S&P 500 cash index around the 2020 level and looked ahead to what could be the next levels of support. 2000 did not provide any support & subsequently 1980 did not either.  For the S&P 500 futures market, the open on Sunday August 23rd was yet another gap down & immediate breach of 1960 ES, which was a major support shelf.  This action pointed to a possible extreme scenario which subsequently played out in the overnight session. It is important to remember that when hyper trends end in either direction, like the one which ended with the breach of the long term weekly SPX chart (attached), an equal or greater acceleration in the opposite direction is highly probable.

Monday August 24th cash open was one for the record books as the DOW opened down over 1,100 points & the S&P 500 futures index was 'lock limit' down prior to open.  As you'll see, the market found it's first level of long time support & then proceeded to put in a wild ride of intraday volatility which is shown in the additional SPX chart & contains near term potential inflection points if the market is to resume an immediate downtrend.  The first obvious level is the downtrend channel.

Please adjust trading approach to factor in the volatility expansion when taking position sizes or your trading will also experience 'risk expansion'.  Stay patient & disciplined.

As always, please continue to monitor the Market Structure Projections via our blog at http://mcm-ct.com/blog/public/  and stay nimble in this market environment.  Good Luck to your trading

These are key MA levels: 2077 (200sma) - 2095 (100sma) -  2086  (50sma) -  2052 (10sma)

These are key support and resistance levels: 1867 - 2040

Bulls Find First Level of Long Term Support

Bulls Find First Level of Long Term Support

 

Near Term Symmetry for Probable Inflections

Near Term Symmetry for Probable Inflections

Intraday Projections: Fading Fast

Today promised should be an interesting day. Participation and internals yesterday were horrid. Most buying was done by small trade ticket buyers. Market structure was also sloppy. We tracked intraday MSP extremely well getting an early morning high, and 10:30 AM low a move of over 20 points ES - however, lows should have continued into 1:30 PM. Timing works its magic of course in that the highs of the cash session was 1:24 PM and led to an impulsive decline in the close.

Additionally, e-Tick Tools generated amazing emotional extremes. 93% of emotional extremes lead to 3.25 point ES moves - more than enough to make a nice living. Yesterday's triggers lead to much more than that. The preferred approach is to trade with some running contracts but to book profits incrementally into the average reaction which is around 5 to 7 points. All of our automated trading systems use this convention - using a process called trade reticulation. The biggest problem with most discretionary trading is being enamored with the big large point winners. This is not productive as it leads to consistent losses and large ones at that. The best way to trade is to BOOK PROFIT RELENTLESSLY as my systems do. Yesterday emotional inflection points were triggered, and executable to 16 to 18 points easily - how many trend traders can capture nearly 20 points in a day without taking a few 5 to 7 point losses or worse? BOOK PROFITS - regardless of timeframe - this is the biggest mistake of discretionary traders. 7 points is the diffusion target currently on ES and 7 points is a LOT OF MONEY.

Bias is negative for the AM session versus yesterday's AM session on the daily MSP chart posted earlier in the week - this condition has been fulfilled presently as of the publishing of this article. Overnight session promised chop, and it has delivered. If no early AM bounce appears the most bearish case for today becomes the highest probability [GOLD MSP on chart]. Strength materializes into the open that should be reverse around the open prints into swift weakness. In all cases, watch for 11:30 AM lows and a fairly useless day after that.

From today's lows, wherever they occur, modest positive bias on Daily MSP projections exists into Monday AM. However, next week probabilities turn decently negative after that into midweek.

August 14th, 2015 Intraday Market Structure Projections

August 14th, 2015 Intraday Market Structure Projections

S&P500 Expert Lounge Update – July 15, 2015

Best to your trading & welcome to our new subscribers

These are key timing for today:   8:30 AM - 2:30 PM EST 

These are key MA levels:  2095 (100sma) - 2100 (50sma) - 2090 (5ema)

These are key Fibs: 2097 - 2107 - 2115

Good day

Here is today's pre market look at the S&P 500 for  July 15, 2015 and good luck to your trading:

 After closing in the first target area on Monday, SPX ran into the second tier of potential resistance yesterday & stalled at the .786 retrace of the recent swing high to swing low posting a high of day at 2111.98.  A similar Fibonacci retracement from all time high to swing low lies just overhead at the 2115 level. If the market manages to clear the highlighted price levels, the probability of a move back to all time highs certainly increases.  Market Structure Projections also have the potential for a key pivot today, so it is optimal to manage long exposure accordingly for the imminent future.

Once again, manage risk, Good Luck and do not forget to keep close notes on the key timing via the MSP as they evolve http://mcm-ct.com/blog/public .

2015-07-15_07-55-27 bear pivot or ath

SPX Key Inflection Point

 

Overview of Today’s e-Tick Tools Intense Emotional Extremes

Below is a chart that references the X-Ticks that were discussed in the previous posts. X-Ticks are VERY important events in that they allow a precise measurement and profiling of the energy and emotions being expended in the markets. Today, was a first. Never having traded through a day that generated the single biggest expenditure of BUY energy in all our sample set of the last 15 to 20 years...we got it. The highest amount of BUY energy ever expended in the markets happened today at 2:45 PM. The key with buy energy is that prices MUST stay above that kind of energy expenditure otherwise its aberrant and likely exhaustion/capitulatory. Currently, after hours we just broke the 100% X-Tick at 2068 and immediately dropped 10 ES points. This presents a potentially very serious issue for the markets (Sorry, I mean central bankers) to overcome.

e-Tick-Tools Review - BIG EMOTION today

e-Tick-Tools Review - BIG EMOTION today