mcm-Alex

NOTE

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The daily market updates will be provided via the chat room, please access it at https://mcm-ct.com/conversation-room-ticktools-livestream/ to get pre-market updates as well as live comments during RTH session.

mcm-Alex

mcm market update 30.Jan.23

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Main trend: neutral

ST trend: down

The market rallied relentlessly in the last weeks, with every drop attempt being bought aggressively. Also of note is that the market saw up squeezes in the last 3 consecutive days. So definitely the market was overextended in the near term. Friday saw bulls pushing beyond the 4100 ES mark, but they gave it up in the last 30m when a aggressive 20 point flush occurred.

The bigger problem for bulls is that that decline seems to have been only the beginning of what looks like a deeper correction. Sunday and Monday saw continued weakness and we dropped another 40 points from there. Bulls lost ML and price is now directly testing macro-ML. If this line is lost, then trend ML is the last defense for the up trend. Bulls could still repair some of this damage before RTH open, but so far the price action is definitely bearish. Each tiny bounce is pounced on and sold to new lows. Danny has been capping price like a champ.

In terms of the larger picture, it is possible the market is heading back to 3700 area, before heading higher above 4100. It all depends on whether bulls can defend macro-ML and trend ML here. Both are at huge technical levels and if they are lost for more than a head-fake, then that 3700 target would start to increase in odds.

mcm-Alex

mcm daily market update 21.Dec.22

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Main trend: down

ST trend: up

After 5 straight red days, and a whooping 300 points loss, SPX finally put in a green candle yesterday. Not only that, but bulls managed to bounce off unconfirmed GSIs on all time frames and won back ML.

The o/n saw a shy continuation of the bounce as bulls managed to hold ML on all back-tests and continued to put in higher highs. Now ML is under attack again, it is key that bulls continue to hold here.

In the big picture view, bulls managed yesterday to also get out of the crash channel which started from the lower high vs 4100. We saw non-stop violent selling inside that channel and bulls are finally out. They need today to be a continuation day to stick the breakout (both over ML and out of that crash channel). The next BIG resistance above is at macro-ML near 3890 ES and then at trend-ML near 3950. These lines align and converge on large technical levels so they are very important. On SPX side 3870-3900 area is going to be tough to overcome from the bull side. If they can 3950 is next... above that is starting to get iffy for the bear case. So keep an eye on that area as we will likely know if this is just a DCB or bulls have bigger intentions .

mcm-Alex

mcm daily market update 16.Dec.22

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Main trend: down

ST trend: down

Yesterday I alerted the members in the mcm chatroom that if bulls were unable to defend the opening SE Xtick and at least try to fill the gap, the breakdown would point to 30-50 points lower and we could be in for a strong down trend day. 1st part proved to be conservative as open to LOD was 70 points, while the 2nd part was spot on. TTs provided nice opportunities to re-short or start a short for those who missed the initial breakdown with danny capping price all day and with several BEs which hit (and held). In such strong trend days best is to play the trend until it breaks, which only happened 1.5h before the close with a decently strong bounce. Danny is an amazing line for showing the immediate trend.

In the o/n we had the exact same set up which we had yesterday in the o/n and triggered the 1st short opp. FGSI bouncing hard on shallow price movement and setting up bearish EE above centerline. The inability of price to conquer the prior high triggered the sell and we sold off 40-50 points, just like yesterday. This sets up another large gap down (if holds until RTH open), and back to back runaway gaps can lead to crashes. That being said, I do not think the market can sustain 2 runaway gaps in an OPEX week. So I would expect MMs to change the tune and attempt to fill it rather than let it run like yesterday. The opening SE will help in identifying if we breakdown again and run or not.

In terms of the big picture, bulls are in big trouble here. They lost the trend (all MLs were broken and are now above price and red) and also the wave structure off the last 4100 high looked like nested bear waves which now confirmed with yesterday's runaway gap. Once they manage to stop the bleeding ,the shape of the bounce will tell us if we are going to revisit the Oct lows or not. In anycase it looks like a bigger retrace is now needed before potential new highs above 4100.

mcm-Alex

mcm daily market update 6.Dec.22

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Main trend: down

ST trend: down

The market put in a high near 4100 last week before pulling back from there. 200DMA is also there plus several technical resistances, including the "bear market TL" coming from ATH, so no wonder that triggered a reaction. The bad news for bulls is that the highs were unconfirmed on all GSIs and price broke below all MLs as well, confirming the change of trend.

Yesterday we saw a clear down trend day with every pop being sold, while the o/n continued in the same manner. Yesterday's LOD is an important lvl on the downside, as we have bullish EE on FGSI vs that low. On the bull side, they need to hold that low and attempt to breakout above 400bar MA (1st step), then to challenge ML.

From a larger picture perspective, the rejection at 4100 looks ominous for bulls, especially coupled with the GSIs showing those highs as unconfirmed. On top of this, the decline off that lvl looks nested, meaning a series of 1-2 waves. If the market continues to drip lower, the drop is likely to accelerate soon. The bulls have one chance here to stop the bleeding and stop the decline as a rare double 3 correction (WXY). The 4020-4040 area is the very important area which bulls need to win back asap. No coincidence that both ML and macro-ML are in that area.

mcm-Alex

mcm daily market update 21.Nov.22

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Main trend: up

ST trend: neutral

Markets finished last week undecided putting in an indecision doji, ending the week near the lvl where they started, with long tails both up and down. Friday was OPEX and the whipsaws didn't dissappoint, large gap up, that got sold hard, then LOD hit near mid day and push higher into the close to end at the infamous 3960 lvl.

The o/n was pretty indecisive, however price dripped lows and broke below ML and macro-ML. Bulls are not beat yet, as Friday's low wasn't broken, but the loss of ML and macro-ML is a warning. Those are the key levels going fwd. If bulls cannot win back ML and macro-ML, then that would mean bears are taking control and we have likely started a larger degree decline. If they do manage to breakout, then they have a shot at pushing this back higher.

In the big picture, things are at a cross roads here. There is at least a chance that last week's high marked the end of the entire move off 3500, which would mean a large retrace is due. Bulls still have some outs as the decline off that high is only 3 waves so far and we overlapped the low of the 1st wave. So if bulls can push here, they can "lock in" another 3 wave decline (which is corrective) and can extend this above the recent highs, potentially into the next resistance area near 4100. The problem is, if they cannot do that and the lows are broken, the most obvious bearish pattern would be a bear nest, which would mean an acceleration to the downside. From an EWT perspective Friday's high is important and then the 4000 lvl on the upside while 3922 SPX and then 3900 are key on the downside.

mcm-Alex

mcm daily market update 18.Nov.22

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Main trend: up

ST trend: up

The market flushed yesterday in a pretty violent manner opening with a large 50+ points gap down, however bulls managed to defend the prior support area near 3900 and staged an impressive rally. The gap fill area provided some resistance for a late day drop, but bulls again managed to come back and in the last 30m almost got back to HOD.

The o/n continued what looked like a new found bullish leg as bulls easily took out the RTH HOD from yesterday, pulled back from there, but then made new highs. So for now bulls look like they are in control as they recovered ML and macro-ML easily. Those lines remain important and bulls will want to hold above in case of any pullback.

Big picture wise it looks like bulls have "one more wave" up looks like a 4th wave, with another push to recent highs near 4030 still needed to complete the move. It could, ofc, go higher, but once we have made a new high bulls will want to be careful as there would be enough waves in place for a complete move off 3700 and 3500. Given that we traveled more than 500 points, the coming same degree pullback is likely to be large.

mcm-Alex

mcm daily market update 15.Nov.22

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Maine trend: up

ST Trend: up

The market continued the melt-up started after the CPI numbers. The rate of ascent slowed, but bulls still managed to clip 4k, before staging the 1st steep reversal yesterday, dropping 50 points in 2h. The drop also sliced below ML, but bulls quickly recovered it in the o/n.

The overall picture is bullish, as price is above all 3 MLs. However due to the quick 250 point rise, bulls are vulnerable to a larger pullback. ML is the 1st main trend support. If that fails, it would target macro-ML. More worrying for bulls is the fact that the recent highs were unconfirmed on all GSIs. And MGSI touched extreme optimism, then had an unconfirmed high. MGSI rarely touches extremes, so that is definitely a warning this rally is very overbought near term.

In terms of bigger picture, bulls rallied so much that now the question if this 1st leg of the bear market finished at the October lows comes into play. Especially DJIA managed to almost overlap its August high, which would hint to that. NQ is still a ways off that high, while SPX is in the middle, so it remains to be seen if these will make new lows, while DJIA makes a higher low and diverge... or if they manage to follow DJIA and continue the run up.

In terms of EWT, the huge gap up 'n run off the CPI numbers feels like a wave 3, so it does seem like we would need a pullback for wave 4, then another push higher into wave 5. Given that it's OPEX this week, this kind of back and forth would fit the MMs quite well to shake out both sides. 4000-4010 is significant resistance and if bulls manage to push through, they could go as high as 4100. We will know more about how likely that is once we see what shape the 4th will have and how price reacts once it retests the recent highs.

mcm-Alex

mcm daily market update 7.Nov.22

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Main trend: neutral

ST trend: up

Things were looking pretty grim for bulls last week after a hawkish FED broke the up trend, price slicing below all MLs and some important TLs. On Thursday bulls managed to defend the 3700 SPX lvl and chopped in a 50 point range. Friday saw a surprising gap up, which was sold twice, but bulls managed to come back each time. Price rejected on Friday at macro-ML, but bulls managed to defend ML, albeit sloppy. So while bears had every reason to break lower, they couldn't, so it looks like they dropped the ball, bulls signaling that they are ready to take the lead again.

Sunday saw a gap down, but also that was bought and bulls managed to defend ML. Now bulls are trying to breakout from macro-ML too. These developments show that bulls are attempting to win back the ST trend.

In terms of the larger picture, EWT wise the situation is pretty complicated. We have what looks like a corrective 3 wave pattern off the 3500 lows, however the drop off the recent highs at 3910 also looks like only 3 waves so far. Given the strong bullish showing on Thursday-Friday it would seem that bulls are attempting to lock-in this 3 wave decline and turn that larger 3 wave bounce into an impulse. 3760 SPX area seems to be the key area to win/defend for both sides. Not surprisingly ML converged there in the o/n and was defended by the bulls. If bulls manage to defend this area, then 3800 is the next lvl above, followed by 3845 and 3895 which are 2 important EWT overlaps.

In conclusion, the immediate trend favors the bulls, as they defended ML and won back macro-ML. They need to hold above these 2 lines to continue the upside. Bears on the other hand would need to prove themeselves by breaking below them. Only if they manage to break back below ML will they be back in the lead.

mcm-Alex

mcm daily market update 31.Oct.22

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Main trend: up

ST trend: up

After hitting a low near 3800 on Thursday, the market bulls managed to bounce hard on Friday pushing to new highs and touching that elusive 3900 area. Mkt finished at the highs on Friday, to end the week on a high note.

Sunday open saw a quick drop from there and we saw the usual ML back-test, as anticipated in the chat room on Friday. Text-book action so far. Now the important thing is what price will do next from this inflection zone. If ML holds, then bulls might get the chance to push one more leg higher. If ML fails, then bears might get a shot at macro-ML below (near 3840 area as of this moment). FGSI is showing bearish EE, as bulls are inefficient, so it could be a sign that bears might get a chance to look below ML.

In the big picture, we had that "at least one more" 4-5 unwind, so the question now becomes is the upside done or will they turn it into sth else. So far the move off 3500 low still looks like a correction. If bulls would manage to defend 3800 zone on any pullback and then push to new high above 3900, then it would start to look impulsive. So we are now at the inflection point of either an abc correction off 3500 OR an impulse. Worth mentioning is that even if this move will turn impulsive, a decent retrace either to 3800 area or 3750 below will be needed. So immedite term, it looks like bulls need to be a bit coutious and see how things shape up before committing too much on the long side.

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.

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

FGSI 50 trade rules

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Only trade in the direction of the trend (the trend is given by the 3 MLs - when all 3 are below price and green - trend is up. When all 3 are above price and red - trend is down).

Pre-condition 

When FGSI/IGSI get below 30, start looking for a trade long. 

For shorts - FGSI/IGSI above 80. 

Additional entry rules:

For longs, in addition to the 1st pre-condition of FGSI below 30:

- IGSI needs to be below 50 (if strong up trend, 54 can be used)

- when both are below 30, it's a high probability trade

Entry:

- pretty much any buy signal will work (a SE, or a TL that gets broken, a cycle support lvl etc), you don't have to wait for FGSI to turn up, but you can if you want to have confirmation of a turn. (ideally near 20 or lower), then buy.

Risk management rules:

- initial stop is very wide (30-40 points)

- initial target is FGSI to hit 50 (or the low before it ticked up + 40 points)

- when FGSI hits 50, you move your stop to reduce your risk. Either to b/e or small loss or even in profit, based on how much price moved. Depending on where IGSI is (if it's below 50, then you don't have to be aggressive with the stop, as the mkt could run). 

- also when FGSI hits 50, you must take profits (partial or fully). if you have a lot of points of profits, you can instead run a trailing stop. if you have only a few points profit or even a loss, you should take it and close the trade as downside might not be done yet (buyers inefficient). 

- if IGSI is below 50, you can let the trade run, at least until IGSI gets to 50 or higher

- if FGSI continues to run higher, next targets are FGSI 80 and then extreme optimism. Same for IGSI.

Note: The market should respond quickly, usually within 5min. if that doesn't happen and GSIs start ticking down again, then it's likely price will make lower lows. if that happens, then just get out and wait for next set up.

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.

mcm-Alex

mcm daily market update 27.Jul.22

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ST trend: neutral

Yesterday bears took control since the o/n after dropping price below ML. The entire o/n session price was capped by ML and then they pushed price below macro-ML into a nice flush towards 3920 lvl, overshooting it slightly. Bulls woke up then and after an unconfirmed low on FGSI managed to push back.

The o/n session was bull friendly this time around. Bulls managed to build on the late session bounce and won back both macro-ML and ML.However, after reacting the important 3970 area, they stalled and now price is back-testing ML again. ML is the key near term, if bulls manage to defend here, then the door for more upside is opened. If ML fails, macro-ML is last defense for bulls. Below that and flood gates open again with yesterday's LOD open to be retested.

Today is FOMC, so it's quite likely the market will chop around waiting for that before choosing a path. Reaction to MSFT and GOOGL earnings seems to be positive, despite the earnings miss. So that could be a sign that markets are ready to rally no matter how bad earnings or guidances are. Fireworks expected after FOMC at 2pm. With clearer direction to be set tomorrow/Friday.

mcm-Alex

mcm daily market update 22.Jul.22

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ST trend: neutral (with potential larger topping pattern)

Yesterday we were noting that the ST trend was neutral, as buyers were inefficient via FGSI, having put in bearish EE vs the prior HOD, and price was testing ML once again. We did mention that ML was key for the trend and buyers managed to defend it initially bouncing to near the o/n high, but head-faked the breakout and droped below ML. That was a head-fake too, as it was then very quickly recovered and buyers pushed to new highs closing at the highs too.

The o/n saw us pullback from the new high and the pattern is a bit worrying for bulls. That squeeze high was unconfirmed on all 3 GSIs (FGSI, IGSI and MGSI). Additionally both FGSI and IGSI peaked at extreme optimism close to there. And both FGSI and IGSI have geo/fib ratios converging there. That means that yesterday's HOD is THE key level for bulls. They cannot affort to pause here, because if this pulls back it will look like a ST top from where a multi-day decline can start. ML is key, as always. As long as ML is defended, this can be just another "usual" pullback before running back higher. If yesterday's unconfirmed high is not reversed (i.e.bested and turned into a confirmed high) and ML is lost, then the larger topping pattern will be confirmed and bulls will want to be careful for a while.

EWT wise the wave counts align well with TTs. Yesterday's final push looked like an ending diagonal (ED). Which also makes that high the key overlap, just like shown by TTs. If ED, then the entire move off 3720 might be done and would need to be retraced at one of the usual Fibs (38,2%, 50% or 61,8%) before (potentially) resuming the up trend.

mcm-Alex

mcm daily market update 20.Jul.22

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ST trend: neutral (pullback to ML expected)

Yesterday the market gapped up big then ran higher all day in an impressive show of strength from the bulls. In the o/n it coiled between macro-ML and ML, with bulls managing to hold macro-ML and once ML was won back there was no looking back. TTs helped with a 100% BE Xtick off the RTH open, which we warned in real time in the chat room that if broken out can lead to an up squeeze.

The o/n saw the usual pattern play out after such a strong up squeeze. Continuation into a new high, then pullback starting. The current pullback is expected to test ML. That is the normal expectation. After such a strong squeeze we might get a shallow pullback, just be aware of that option. As long as the ML back-test holds, bulls have the ball. If ML is lost, then macro-ML would be next target, so the coming ML test is a big inflection to watch carefully.

FGSI is showing buyers inefficient on the last bounce, so ML test is almost assured at this point. IGSI is below center line after falling from extreme optimism, while MGSI is coming lower from an unconfirmed high. So not all is rosy for bulls, making ML the key lvl which they must defend to get a shot at higher prices before a more significant pullback.