mcm-Alex

mcm daily market update 27.Oct.22

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Main trend: up

ST trend: neutral

Yesterday the market continued to push higher after holding ML once again. Bulls almost touched 3900 ES, before bears finally emerged and we had the 1st large reversal lower in quite a while. Price ended up near ML again.

The o/n was neutral, as bulls managed to win back ML initially, but gave it up again. So far though they are still avoiding a real ML breakdown, so the immediate trend is up for grabs. If ML is lost on a sustained basis, then macro-ML is the next target on the downside. Losing macro-ML would be very problematic for bulls as it would signal the main trend is shifting as well.

In the bigger picture, it looks like the impulsive move off 3650 finished yesterday and we started a larger degree correction. Whether the entire move off 3500 finished is debatable since the waves are overlapping and some of them also look corrective, which would point to either a complex correction (WXY type) or at least one more 4-5 unwind to the upside needed still. So one step at a time continues to be the right approach. For now it looks like bears finally started a larger correction so once this 1st push lower is done, a DCB (dead cat bounce) and then another push lower should be the next path. After that, we'll just have to see if it will turn into a larger impulsive move or not. 3750-3770 looks like the inflection area bears could hit on this pullback.

mcm-Alex

mcm daily market update 12.Oct.22

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Main trend: down

ST Trend: neutral

Yesterday the market dropped to new lows, before staging a face ripping rally until lunch time. After that the BOE crushed the bulls' hopes and the mkt lost ALL its gains to make a new low on ES and basically made a double bottom on SPX before bouncing a bit into the close.

The o/n was decently bull friendly as they continued the late day bounce and even managed to peak above ML, but the PPI came in hotter than expected, so bulls lost what was building as a gap up and now indicate a flat open. The RTH open will be important, as will reaction off it. If bulls can win ML again and hold above it, then they may have hopes at a larger bounce into a macro-ML back-test. On the other side, if bears take control early on, this can slice the recent lows to make new lows again. Therefore for today ML is key on the upside, while yesterday's LOD is important on the downside.

In the big picture, this chopping around is typical of a compressed spring before the explosion, setting up after CPI release tomorrow. Wave wise the lows do not look stable or "clean" and I would expect them to be taken out, if not today, then tomorrow after CPI. Because we overlapped the end of Sept lows, the entire move off 4300 now looks like an impulse, however the last wave (5) is still too short. Which means more downside is likely needed before the structure can complete. The last wave started at 3800, so that's the KO lvl for bears. If bulls can somehow overlap that lvl before heading lower from here, then they would have dodged a bullet. Given how the structure looks at the recent lows, I put the odds of bulls winning 3800 before we are heading below 3500 at slim to none. The GSIs also lost the clear unconfirmed lows with the subsequent lows as both FGSI and IGSI have confirmed local lows. That's not ideal since it would indicate that the initial unconfirmed lows were broken as momentum was too strong and the bounce was overwhelmed.

mcm-Alex

mcm daily market update 10.Oct.22

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Main trend: down

ST trend: down

Friday the market finally revealed its intentions after the back and forth on Wed-Thu. The NFP numbers coming out at 8:30am were the final nail in the bull coffin as the market dropped 50points instantly. The forces at work managed to hold the line there until RTH open, but the cash session was simply horrible for bulls. It gapped down about 40 points, but sold off the entire day with only tiny bounces and dropped nearly 90 points more until the day's LOD.

Sunday saw lower lows being made, bears taking out quickly Friday's lows, before bulls managed to bounce back to 3650 area on ES. LOD and 3650 defined the ranges of the o/n action with 3 round trips from the lower range to the higher one. FGSI is sowhing that both sides are rather inefficient, so looks like chop until RTH opens.

In terms of big picture, no change vs what I indicated last week. I believe Wed's high marked the end of a higher degree 4th wave (of the impulse started at 4320), and we are now in wave 5 of that move targeting 3000-3300 area. Until we break the late September lows, we will have no confirmation that the move off 4320 is indeed an impulse, but I believe that can be achieved today. That area should provide at least a DCB though, to trick some bulls into thinking that a double bottom is holding and shake off some late bears. It would be strange for such a strong support area to be broken directly without a fight. So after we break that low, be on the look out for a fake breakdown and quick recovery. If they go that route, the bounce target would be the breakdown area near Friday's RTH gap open (3708 SPX).

mcm-Alex

mcm daily market update 3.Oct.22

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Main trend: down

ST trend: down

On Friday the market managed to stage a nice bounce back to the 3680ish zone before failing and flushing to new lows. I mentioned that bears are in the "pay me now or pay me later" camp as the move into the lows looked incomplete and the new low confirmed my view. The sell was pretty relentless in the 2nd part of the day and RTH closed near the lows.

The bigger problem for bulls is that price was rejected at macro-ML and they lost ML quickly after that too. Which confirms the conclusion that the trend is still down, as bulls are unable to hold any support on the way down. the up moves are just DCBs to shake off bears, but once the selling resumes, supports are broken with ease. As we had a down squeeze on Friday, a ML back-test would be normal. We already had a shallow one in the o/n and it might very well be that's all we get.

In the bigger picture, not much changed vs our Friday post. The move off 3737 is still a 3-waver. Friday's bounce was simply completing wave 2. So again bears can say "pay me now or pay me later". From an EWT perspective, bulls have some near-term options, including the presumed wave 2 becoming more complex (therefore needing another bounce to 3680 area before back lower) or even this move off 3737 being part of the prior (larger) wave 4 and needing a pretty direct bounce to 3740-3750 area. I do think that's rather unlikely, but in case bulls clear 3700, then it would start being more likely. The bear option is pretty straight-fwd. Gap down that goes directly lower to finish wave 3, then DCB for wave 4 then final wave 5 flush.

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.