Significant Downside Probability Dead Ahead

If you monitored the work published on this site and that our community has received the last weeks, the daily directional projections have been correct 10 out of the last 11 days. Additionally to that, they have been directionally correct for almost 90% of the previous 30 days which can be documented on the site. In addition, the intraday projections have been playing out every day this week usually to within an hour accuracy with 90% directional precision - certainly well beyond our objectives and also a continuation of the uncanny accuracy of the methods and data.

July 7th, 2015 Daily & Weekly Market Structure Projections Update

July 7th, 2015 Daily & Weekly Market Structure Projections Update

After reviewing the data into the close this week, probabilities for the next 4  weeks or so, are likely to be characterized by weakness generally, with probability for Wednesday or Thursday strength (not both days but only one per week). The likelihood is for only about 1.3 up days per week. Specifically, it looks now most likely that this coming Monday (max Tuesday) is likely to represent a turning point and that the odds for a measured rally are not likely until mid-August.

Highest likelihood near-term is for persistent weakness. From a logical standpoint, it is fairly unreasonable expect volatility to subside which indicates that the option for a subdued consolidation decline is not high odds and more that the odds for a significant rally that is virtually totally unsupported by any probabilistic data is very low. Therefore, this reiterates the prospect for weakness over the next weeks with lower highs on rallies that start around the 2nd week of August into September .

The operational assumption is that September into October is most likely to form a large right shoulder of some form - that will be seen. After this week's activity closed today - confidence in these probability scenarios, as presented, is significantly increased. Of course reality will tell.

One of the additional reasons for more negative potential is a result of intraday MSP overwhelmingly turning toward negatively probability. In addition, to daily and weekly market structure projection (MSP), general tendency MSP, which projects broadly conformed and context relevant wave structure into the future - favors towards the negative.

With macro issues like margin debt almost doubling in the last 2 weeks in China, the Greek saga and significant credit stresses in Portugal, Spain, Italy and many eastern block countries over the last week, it seems that the near term context is not supportive of a calm retracement or sustained rally appearing on the horizon. The best outcome for the markets seems to be to lay with the possibility for a significant rally into early next week - probably on gaps which is another issue with the idea of something constructive emerging.

Moreover, its is somewhat alarming looking at the mcm Indexes which will be updated and published once more this weekend. It seems simply unlikely that any rally of significance can be built on the back of the horrid losses being absorbed by investors in the current markets that are represented in the indexes:

 July 2nd, 2015  mcm Indexes

July 2nd, 2015 mcm Indexes

While the data interpretation could be wrong, or this data may just plain be wrong, shorter term probability analysis will certainly adjust in that case. But seldom have we seen so much downside probability than presently. The exception is that October this year appears setup for much more extreme downside. The end of the week the picture has firmed and upside into Sept appears most likely to be a lower high and very volatile with volatility excursions generally favoring negative surprise.

Longer-Term Market Structure Projection into September

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