mcm-Alex

mcm daily market update 30.Sep.22

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Main trend: down

ST trend: neutral

Yesterday the market saw a big gap down open and flushed more after RTH oepned. it stopped near the prior lows and staged a bounce, but it was just a DCB and mkt dropped to new lows after that. Last 1h brought again a short squeeze and price got back near ML again.

The o/n was decently bullish so far. ML back-test pushed price lower, but bulls made a higher low vs yesterday's LOD and then pushed back to win ML. Now price is chopping between ML and macro-ML. Mkt is waiting for the PCE numbers coming out at 8:30 ET. That is likely to trigger fireworks so watch your stops.

In the bigger picture, the market continues to act weak. Every bounce is sold and bulls are unable to hold any support. That is not constructive price action for bulls. EWT wise, bulls had a shot at a larger multi-day bounce yesterdays at the initial low reached in the morning, but again they failed to hold and the new low points to further weakness as now the move off 3737 looks like only 3 waves and therefore incomplete. Bulls do have a few near term options, so it's not crystal clear if we are gonna break the lows directly or if bulls wanna bounce first. In any case it is again a case of "pay me now or pay me later" for bears, as yesterday's lows are unlikely to hold for long. PCE is the catalyst and after this data we will know if we are going lower directly or after another trip higher.

mcm-Alex

mcm daily market update 27.Sep.22

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Main trend: down

ST trend: neutral

Yesterday the session was choppy both ways in a sign that the trend is still down, but MMs are trying to shake out put holders as much as possible. The o/n session saw 2 tests of Friday's lows and 1 test of Friday's high. We gapped down, but bulls quickly stepped in and made another push to a minor new high, before completely getting rug pulled and seeing a drop below Friday's lows. However bulls did manage to defend that area and staged a late day bounce that almost got entirely retraced near the RTH the close.

The o/n was more bullish as price rose without taking out yesterday's lows and bulls managed to test yesterday's HOD, winning back ML in the process. That initial push was sold into a ML back-test which bulls are now trying to hold. Therefore the ST trend is neutral, as there is currently a heavy battle for ML. If bulls manage to hold here, then a push into a macro-ML test above would be the likely next step and inflection area. If ML is lost, then yesterday's lows might get tested once more and this time it's unlikely they will hold.

EWT wise, it would seem the action in the last days is a 4th wave, as it would fit best the back and forth character. In terms of the big picture, it is unlikely we will find a longer term bottom until VIX pushes above 35. All prior large declines saw VIX peaking between 35-39, while the big drop from 2020 saw that near 45. Given that this time around it only touched 32, it looks like there is still a bit more to go before we could get at least a multi-day bounce.

mcm-Alex

mcm daily market update 22.Sep.22

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MT trend: down

ST trend: down

Yesterday we noted that the MT trend was down, while the ST trend was neutral as bulls had won ML and were trying to hold above. The session proved to be sideways chop, as predicted, while everyone waited for FOMC decision and presser. That brought the expected volatility as mkt tanked 70 points, then ramped 80 to make a new HOD, after which it dropped like a stone to break the lows.

The o/n was more lenient with the bulls as after a lower low, which was unconfirmed on FGSI, they managed to stage a come-back and back-test ML. Now price is hovering just below ML, which will make the next move off RTH open key. ML is the main LIS for the ST trend, so if it continues to reject price, we could head on over to yesterday's LOD and possibly much lower if that give way. On the bull side, if they manage to win back ML they could push into a macro-ML test. Winning also macro-ML would signal they are attempting to finish this downside move.

On the EWT front, we do not have much clarity unfortunately. The main flaw of EWT - the "too many possible options" is holding true here. The wild whipsaws yesterday were likely part of the same corrective move, so we started a new impulse at yesterday's FOMC high and HOD. But whether that impulse finished already and with it the larger degree impulse off 4120 is still a "?". If it did, then a large retrace (bounce) is needed before more downside. If it did not, then this move could choose to extend.

mcm-Alex

mcm daily market update 19.Sep.22

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Main trend: down

ST trend: down

On Friday we noted that both MT and ST were down as all 3 MLs were above price and red, after bulls lost them all following the CPI number release. We also issues a CRASH warning set up in our EWT analysis, as the market looked bear nested off the 3960 area. Given that Friday was OPEX, MMs managed to stop the bleeding at 3840ish, following a 35 points gap down, and even managed to stage a face-ripping rally in the last 2h to save themselves from paying too many put positions.

As noted in the chat room on Friday, the rally looked "phony". The LOD on Friday was looking like a b-wave, meaning that it should be taken out, before too much upside. The market delivered and we took out Friday's low in the o/n session already. Not only that but Friday's rally stopped dead right at ML, for another ugly rejection. So for now the trend is down.

In EWT terms, the CRASH warning is still valid, however it looks at least possible that the impulse off 3960 area finishes with the new low (once RTH opens). That will be the next decision point. If bulls manage to stop the decline and bounce convincingly, then they have a few options that postpones the CRASH for at least a few sessions. They might push this back to 3960 or even 4000 before that is done. However if bulls can't stop the bleeding soon, the CRASH might happen rather directly. Considering FOMC decision on Wed, that looks rather unlikely though.

mcm-Alex

mcm daily market update 16.Sep.22

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MT trend: down

ST trend: down

After the CPI print and rug pull on Tuesday, the bulls were unable to find their footing. Being an OPEX week, MMs did a great job of stalling both sides after Tuesday LOD and kept things confined in a 60 point range between 3900 and 3960 SPX. However bounces were quickly hammered down to lower lows and finally the low of the range gave in yesterday.

While the RTH close stick saved 3900 SPX lvl, the o/n decisively broke it and traded as low as 3860 SPX equivalent. Bulls were simply unable to get off the mat. FGSI is showing a confirmed low at LOD, which is bad and also shows bulls are very inefficient at moving price. IGSI also looks terrible for bulls as it's close to centerline, but price is at the lows. Price was capped all session by the 400bar MA which is the lvl to win back (on a sustained basis) for bulls to have a shot at reversing this trend.

The bigger issue though comes from EWT. In fact, given the wave structure, we are on a CRASH WARNING set up. It looks like we have started a higher degree wave 3 at 4120 and the minor degree wave 2 of this wave completed with a tiny retrace (couldn't even hit 23,6%). Additionally the even lower degree wave structure shows the potential for a bearish nest started at 3960. What that means in plain English is that the market could run towards the target for the higher degree 3rd rather directly. Meaning 3500 in the next few session (!). Today sub 3800 is entirely possible in that case.

Bulls have 1 chance to turn this. They need an RTH open close to 3870 which immediately runs to close the gap down and then overlaps 3930. IF the can achieve that (big IF), then there have some options which could see yet another bounce into 3970 area or even higher into 4000-4030.

mcm-Alex

mcm daily market update 8.Sep.22

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Main trend: neutral

ST trend: up

Buyers finally managed to stage a big up day yesterday, after all prior attempted bounced were sold hard intra-day for the past weeks. Not only that, but they also managed to win ML and macro-ML. And kept pushing higher, so both changed colour to green.

The o/n saw a rather usual behavior after a big up squeeze. Sideways consolidation, then another push higher into a minor new high, then a pullback. Normally a pullback to ML would be expected. Once that happens, that would be the big inflection point. If bulls can avoid a ML test and manage to push higher directly, that would be more bullish (with the o/n high being the inflection area). It is lower odds vs the ML test, but in case it happens then a new up squeeze leg could happen and ML back-test would be pushed until tomorrow.

From an EWT perspective there are many options on the table, but it would seem that the leg down started at 4325 finished and we are working on a higher degree bounce. This doesn't mean that it would go much higher before turning. That being said, it should still hit at least 4060 before dropping again (38.2% retrace). However once that happens, the next leg is expected to be at least as large as the initial drop, meaning ~400 points, so the risk is very elevated for longs.

mcm-Alex

mcm daily market update 02.Sept.22

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Main trend: down

ST trend: up

Yesterday we noted that both main and ST trend were down as all MLs were above price and red. Mkt kept getting rejected at ML and making new lows. From and EWT stand point we mentioned that "unless bulls filled the gap quickly... it would need at least a few unwinds of 4-5 waves to finish, so still a few new lower lows". The latter scenario played out with bulls unable to fill the gap in the first 30-60m and instead made a few lower lows, before bulls were finally able to step in near 3900. They bounce hard in the 2nd part of the session and managed to fill the gap before RTH close while closing at the highs.

The o/n was balanced. Bulls managed to hold ML on all pullbacks, while the o/n high at 3970 reached early on capped price. Price is compressed here with everyone waiting for NFP numbers to decide on a direction. With NFP good news is likely to be sold as it would mean Fed can march ahead with its hikes and viceversa. The compression zone is o/n HOD at 3970 and ML below. Breakout/down will be important and likely triggered by reaction to NFP.

From an EWT perspective, it seems we finally finished this down wave from 4200 and J-Pow' speech, which kept extending and extending. Normally after such a period price snaps back strongly, so the bounce should have some legs at least for a few days. That being said, this is likely just a DCB (dead-cat bounce) as the move off 4325 is very likely impulsive so after a bounce another impulsive down leg should follow. The "?" is if this move off 4200 is wave 5 as initially presumed, or wave 3. This is now debatable because the 5 extended much more than usual. However in both cases a decent bounce is due. We will have to assess which option is actually playing out after we see more cards.

mcm-Alex

mcm daily market update 1.Sep.22

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Main trend: down

ST trend: down

Yesterday we noted that both the main and ST trend were down as all MLs are above price and red, while ML continues to reject any back-test. Bulls made 2 attempts to win ML yesterday. One in the o/n and one during RTH. Both were rejected and price then proceeded to make lower lows. There was a chance at a complete ED yesterday in the afternoon, but the last 15m strong selling made a new LOD and with that killed the bull' hopes.

The o/n saw continued weakness, the market shedding another ~30 points from yesterday's close at the lows. Bulls managed to base off 3920 and staged a bounce, but couldn't even make it to ML. As we said yesterday, as long as ML continues to cap price action, the trend is down and bears have the edge. Any potential bottoming attempt (off unconfirmed lows on GSIs) needs to be confirmed by a breakout above ML. Otherwise price can continue to make lower lows.

From an EWT perspective, bulls had a good shot yesterday at a complete structure, but failed with the late day sell-off. The expected gap down would put bulls under pressure again, unless they manage to quickly fill the gap. There is the potential at a larger ED, which would allow for an overshoot, but it needs to be contained and quickly recovered to work. Otherwise the structure of the last wave would indicate a bear nest, so it would need at least a few unwinds of 4-5 waves to finish, so still a few new lower lows.

mcm-Alex

mcm daily market update 17.Aug.22

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Main trend: down

ST trend: down

Yesterday we noted that the ST trend was neutral as both sides were inefficient, while the main trend was up as buyers managed to hold above ML. We had some more whipsaws near ML, but finally it was defended once again and buyers then proceeded to yet another up squeeze higher into new highs. What is interesting however is that the new highs stopped suddently and we saw the first impulsive looking decline in quite a while. That decline was bought from ML vicinity and retraced exactly 61.8% Fib ratio, before stopping just near the RTH close. The fact that the up squeeze retraced so quickly and we tested ML again in the same session, was a sign that bulls are losing the trend.

As mentioned several times before, once ML would be lost, the main trend changes. And ML was significanly lost in the o/n session. The o/n moved sideways early on, retested the bounce high from just before the RTH close and failed exactly there. FGSI signaled that short with a nice extreme optimism reading and from there we saw a big drop. Once ML was lost macro-ML would be the next target and potential inflection and we are there already. FGSI is at extreme pessimism, but bulls are having problems getting a bounce together, so the decline can continue for a while. Danny is the main line which should be watched for a change in the ST trend. Once bulls manage to win it back, that would signal a larger bounce can start. ML and 400bar MA are next key lines for upside. And unless bulls win back ML, the assumption is that we found an important top at yesterday's HOD. All 3 GSIs were showing unconfirmed highs there (IGSI and MGSI had their 2nd consecutive unconfirmed high reading), which means the prerequisites of an important medium-term TOP are there, while the break below ML confirms that set up.

EWT wise, it is possible the the entire move off the 3646 low is done and we have started the next large down leg. We have what looks like a large ABC zig-zag off there and because the C is so large (touched the C=2xA at yesterday's HOD), it can always turn into an impulse. Personally I doubt that will happen, so my current assumption is we have topped and it's STR (sell the rip) time for a while now. The bulls can invalidate this assumption if they overlap yesterday's lower high from before the RTH close.

mcm-Alex

mcm daily market update 12.Aug.22

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ST trend: neutral

Yesterday we noted that the ST trend was up, as bulls continued to push higher and even avoided a ML test, which would have been the normal expectation after an up squeeze like on the CPI numbers day. And indeed bulls managed to squeeze shorts once more after RTH open and pushed to 4260, before exhausting themselves. The main issue for them is that yesterday's gap now looks like an exhaustion gap as it was filled completely. Not only that, but towards the end of the RTH session they had problems holding ML as support.

The o/n came to the rescue for the bulls as they managed to win back ML and then grind near it, before pushing higher. That push generated bearish EE, which was defended and then price came back to ML. So now we have the chop zone - ML to the lower high from yesterday and which is the bearish EE lvl on FGSI. Until one breaks there is no resolution and the trend is neutral, meaning chop.

From an EWT stand point it is possible that yesterday's high marked a longer term top. However the decline off that high is a clear 3 waver. That means that the KO lvl for the immediately bearish scenario is exactly the lower high vs which FGSI is showing bearish EE. Funny how that works and how TTs and GSI lines converge into these important points. So if 4240 is broken, then it's likely yesterday's high is not "THE" top and more work is needed to the upside. on the other hand if yesterday's LOD is taken out, then the "top is in" scenario would start gaining a lot of weight.

mcm-Alex

mcm daily market update 08.Aug.22

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ST trend: up

On Friday the market gapped down big after the job numbers, however the bulls showed that they are still in control of the trend as they stepped in and filled the gap entirely, before chopping in that range for the rest of the session.

Sunday saw a small pullback, which was bought and now bulls are back at it again, challenging last week’s highs. The GSIs are showing that things are quite stretched up here, with both FGSI and IGSI hitting extreme optimism. Now FGSI is showing that this latest push as an unconfirmed high. So it is up to the bulls to keep going and turn it into a confirmed one. If they can’t and the market turns, then this could turn into a larger correction.

What is more important for the bulls is that they won back ML after it was lost on Friday. It also changed color back to green. So for now the trend is (back) to up, but the next time ML is lost it is likely to signal a change in trend longer than 1 day.

mcm-Alex

mcm daily market update 29.Jul.22

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ST trend: up

Yesterday we noted that the ST trend was up, as buyers managed to consolidate sideways after the huge up squeeze off FOMC. We also mentioned that "As long as ML is below price, bulls have the edge.". That turned out ot be true. The initial push higher off the RTH open was a bull trap, as price fell abruptly afterwards right into the all important ML test. ML held (helped by a SE triggered on TT at the exact lvl) and bulls stepped in with force and never looked back.

The o/n was again bull friendly. AMZN and AAPL earnings were very well received and pushed the market even higher going about 40 points above the RTH close (which was near the highs of the session). Then price pulled back in the same sideways move like yesterday. However this move had even more limited downside as we are hovering near the highs still. After the big up squeeze from yesterday (2nd day in a row) the same normal expectation sees price making a ML test. As long as ML holds, bulls can keep running higher. Once ML will fail that would be the indication that the main trend is shifting to downside, until then bulls are in control.

As market is gapping up, the reaction to the gap in the first 30m-1h will be important. It could be an exhaustion gap given the vertical move we saw since Wednesday or it could be a continuation gap which runs to squeeze the last remaining bears. Pay attention to the RTH open and reaction after it.