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.

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.

mcm-Alex

mcm daily market update 15.Jul.22

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ST trend: neutral

Yesterday we noted that the ST trend was down with potential bottoming process ongoing, as ML rejected price but FGSI was showing an unconfirmed low already. That low was broken and we made lower lows, but FGSI refused to confirm that low also and buyers managed to find a footing there (near 3720). Atfter that they staged an impressive rally, which was initially rejected at ML, but then they managed to breakout.

The o/n was friendly to the buyers. they managed to push higher than the RTH close, touched macro-ML where price was rejected. The drop came into a ML test which held after the initial spike lower. Now price challenging macro-ML again. The buyers have a slight edge here as they managed to hold ML. FGSI has large swings both ways, so neutral. On the upside macro-ML is the lvl to beat for buyers. Sellers on the other hand need to sustain a breakdown below ML to potentially have a shot at retesting yesterday's lows. Mkt looks coiled between ML and macro-ML, gathering energy for a breakout/down.

Today is OPEX, so we might see large swings both ways to decay both sides. Just be prepared for that and don't leave a position unattended.

EWT wise, the triangle pattern was invalidated. I still think this is a large B wave, but regular zig-zag or WXY, as oppossed to the presumed (now invalidated) triangle. The pattern could sustain one more low near 3700 and still be a B wave. If that plays out, next path is a large C wave move higher to 4200-4300. If the lows at 3640ish are broken, then more immediately bearish. In any case, it looks like we are close to a resolution soon. Max 1-2 trading sessions and the new trend will emerge.

mcm-Alex

mcm daily market update 11.Jul.22

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ST trend: neutral

On Friday we were noting that the ST trend was neutral as we had the normal pullback to ML after an up squeeze, but it was a bit too shallow. Sellers were inefficient on FGSI, but then also buyers showed the same with bearish EE vs the prior high. The market showed that it is undecided during the entire session as it fell quite dramatically after the NFP data, to take out ML, but win it back quickly and then it proceeded to take out the prior day highs after RTH open. Then another 2 whipsaws down to ML and up again near the highs to finish a chop shop.

Sunday and the o/n saw a continued decline and buyers lost ML and also took out Friday's lows. And while sellers have some reason to celebrate, the o/n low came near macro-ML and also put in an unconfirmed low on FGSI. That's concerning for sellers and unless they take out that low, that could indicate an important bottom. Price made it back to ML and it testing its underside, reaction here will be important. If buyers win back ML, then the o/n LOD is confirmed as an important turning point. If ML continues to reject price we could see a revisit of the o/n LOD. Buyers want to avoid a break of that level and of macro-ML to ensure that another leg down doesn't happen.

EWT brings a bit of clarity here, as Friday's highs were not "clean". Meaning the wave structure into those highs didn't look impulsive and it is presumed to be a b-wave high. That means that we should take out those highs before a potentially large decline happens. So this adds weight to FGSI's indication that the o/n LOD might be the low before a strong bounce. SPX cash trumps futures in EWT terms, so we'll have to see what RTH open brings. For not BTD seems to be the better R/R in the big picture. That being said, this is likely to be minor wave 4 of either a large B-wave or of the large C going up. And wave 4s and B waves are notorious for being very difficult to trade, with large and sudden swings both ways. So caution is warranted.

mcm-Alex

mcm daily market update 06.Jul.22

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ST trend: neutral

The market threw in 2 "there and back again" moments as it took out Friday's high in the o/n session, only to give up all those gains and test last week's lows during the RTH session. There buyers found their footing again and rallied right back up to the highs again.

The o/n did little to resolve the situation as we had the usual push to minor new highs, then consolidation back to ML. So far ML is holding, but buyers are unable to move significantly past the highs. FGSI is also showing large swings both ways, so for now it seems the near term trend is up for grabs. ML and macro-ML are the main area and line in the sand. If these are lost, then sellers would take the lead and quite possibly take us lower than last week's lows. If ML and macro-ML are defended, then buyers could start to squeeze higher. Binary outcome so far.

In terms of the big picture, the EWT options also look binary. Either we are already in wave 3/C going (buyers would need to continue higher directly for that), or we just finished a complex correction wave b of 2/B and we should head lower in a minor c wave (or larger 2/B). Target for this would be 3700ish, so buyers need to step in here to avoid that.

Also a note on the new additions to FGSI and IGSI charts. Fib and geometric ratios have been added to these price charts and as can be seen they work quite well. Risk management is paramount for these though, so if playing the convergence of lvls, stops below that lvl are a must. They caught all significant highs/lows so far, so when they trigger it's definitely worth paying attention to.