mcm daily market update 21.Nov.22

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 daily market update 18.Nov.22

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 daily market update 15.Nov.22

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 daily market update 7.Nov.22

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 daily market update 31.Oct.22

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 daily market update 27.Oct.22

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 daily market update 12.Oct.22

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 daily market update 10.Oct.22

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 daily market update 3.Oct.22

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 daily market update 30.Sep.22

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.