Djia
Weekly Update: Why Couldn't NVidia Save Us?Maybe the catalyst higher starts at Jackson Hole and Chairman Powell's speech at 10am? If not that, then the market will move higher because of either a soft, or NO landing recession thesis. As I continue to update my sentiment chart for my followers, these are the current narratives being discussed...but it will not matter to the sentiment chart what the narrative is.
The Sentiment Chart simply is a repeating visual of trader sentiment. The narratives will change. The Sentiment Chart doesn't. It simply repeats.
If intermediate waves 1-2 are done then this is about to get ugly.
Best to all,
Chris
DOW JONES First time near the 1D MA50 since July 10.Dow Jones is having the strongest pull-back since late May, so far still within the technical boundaries of the 5 month Channel Up. In doing so, it is only a few points before hitting the 1D MA50 (blue trend-line), which has been intact since the July 10 Low. Despite that contact, the index hasn't closed a 1D candle below the 1D MA50 since June 01, which was at the start of that Channel Up Higher Low.
As a result, we remain bullish aiming at a +6.10% rise to 36800, as long as the 1D candle closes above the 1D MA50. If it fails we will take the small loss and quick sell instead towards the 1D MA100 (green trend-line) at 34200, which is exactly at the bottom of the 5-month Channel Up.
If that scenario is materialized, then we will only buy again after the 1D MACD completes a Bullish Cross, most likely (but not necessarily) closer to the 1D MA200 (orange trend-line). In that case our buy target will be 36900, just below the All Time High of 2021.
P.S. The 1D RSI already broke below its Higher Lows trend-line, potentially an early bearish warning.
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Sentiment Index UpdateToday I shared a video in my trading room of Tom Lee on CNBC post his CPI massive rally call which didn't materialize.
One member pointed out:
" Lol. The man in this interview is not “fearless.” He is having trouble getting it out, and he has concerns. He is impressed by the “pronunciation” of this move. "
I share the sentiment chart so we can observe the mental psyche of both sides (Bulls and Bears) and how it never changes and just repeats. This sentiment causes buyers and sellers to vote each day through the buys and sells they execute...how they vote, provides us a visual pattern. This pattern is much more forecastable than the internal fundamentals.
Best to all,
Chris
US30 ForecastAfter 3 weeks of being range, it seems us30 can fall towards 33% level, as a retrace for higher probable prices.
Weekly Update: Nothing Lasts Forever. NOTHINGI vividly recall a few years back having just finished labeling the above chart of the SP500 from inception. I labeled the chart and included most of the historical events that occurred over the course of that time. As a trader, I wanted to have a quick reference visual picture of price action during war time, innovation, and societal change, juxtaposed on my EWT count.
Afterwards, I plopped on the couch and wanted to “Veg Out”. As a full-time trader and analyst, my mind was kaput. Exhausted... I wanted to watch something on TV that required no more of my brain energy. I turned on the History Channel and subsequently settled on this series called, “Life After People”. As the series progressed, I went from mentally exhausted to engaged. The simple summation of the series was that despite us having built sky-scrapers, cities, bridges, etc., if people we’re no longer around, the sum of the proof we ever existed on earth would eventually get overrun, deteriorate, and the final result would be recycled by the planet into the sum of its elemental parts.
The series referred to this process as Entropy. I wondered if the time I spent laboring over the machinations of price action since pre-industrial America was in fact, the natural order of progression. Birth and death. Start and finish.
I looked up the definition of Entropy and here it is.
Entropy is a scientific concept, as well as a measurable physical property, that is most commonly associated with a state of disorder, randomness , or uncertainty . The term and the concept are used in diverse fields, from classical thermodynamics, where it was first recognized, to the microscopic description of nature in statistical physics, and to the principles of information theory. It has found far-ranging applications in chemistry and physics, in biological systems and their relation to life, in cosmology, economics, sociology , weather science, climate change, and information systems including the transmission of information in telecommunication.
Every known thing, will eventually succumb to Entropy.
I found the concept of entropy, captivating, thought provoking, and I couldn’t help but wonder if entropy applies to what I do. I’m a full time trader. When I am asked what I do for a living, that is always my response. But I also associate with being termed a financial pattern analyst, an Elliotition, or just a plain ole’ analyst. As an Elliotiion, I practice the financial forecasting principles discovered by RN Elliott in the early 1930’s. My association with Elliott Wave Theory (EWT) was a normal one, as I never conceded price action was random. Even as a young investment banker in my twenties, I always had this nagging notion, that however subjective or complex the stock market appeared to be, that eventually a simple construct would emerge that would lift the veil of the random, to allow for a more scientific methodology to answer the movements of stock prices and markets.
My introduction to the principles of Elliott Wave Theory started that quest for answers to seemingly unanswerable.
In Elliott Wave Theory, counter-trend patterns such as waves 2, 4 and B, are areas of potential complexity. It is within these particular wave degrees that some of the most obscure financial price action patterns come into view. From triangles, to WXY's, and the gamut of pattern complexity carves out their shapes here. To even the most seasoned Elliotition these areas can cause confusion, mislabeling and undoubtedly, uncertainty. In the intermediate sense, they mean less. But when observed in the larger cyclical timeframes, these areas are always associated with economic and/or societal change.
The last financial supercycle waves took place on October 1929 wave (I), and April 1932 wave (II). Post 1932, financial prices have advanced seemingly unabated for 90 years. During this 90-year timeline, humanity has advanced in technology, medicine, communication, etc…all of which have impacted living conditions and average life span. These advancements changed migration patterns, mobility and communication.
I can’t help but think, is now the precipice of where our 90 year advance and the natural order of entropy have hit a tipping point and henceforth, entropy now has statistical favor?
Granted I am not skilled to discuss societal matters or medicine, etc…but from an analysts perspective…Is flat to down now the path of least resistance in the markets for the foreseeable future?
Along the way of the 90 year advance in the SP500 you can see the historical events that have occurred and their impact on price action. Those price action sub-divisions were the result of the best and worst of times post 1932. My children, now grown adults, were financially shaped most by the 2008 financial crisis. However, in the grand scheme of super-cycles…you can barely make out those declines on the above chart. The final anecdote I’ll share is in 1991, when my wife and I bought our first home. Making what we believed to be one of the largest purchases we would make in our young lives, we watched mortgage rates as they flucuated. Then, we pulled the trigger to lock in rates, due to a short term dip, and at the time, felt we were wiser than most. So happy with our shrewdness in locking in 9.75% APR on a 30 year fixed mortgage. In retrospect, mortgage rates never went back above 10%. The last two decades, fiscal policy was on a longer term trajectory to 1-3%. We were not the gurus we made ourselves out to be back then. Maybe that trajectory down was a reversion to the mean in the post Larry Summers Fiscal policy of the mid to late 1970’s. Seems so now with the benefit of hindsight. But now it feels like that again…but this time the reversion to the mean is a post Ben Bernake fiscal policy. I can’t say for sure, as I do not posses that kind of foresight with respect to interest rates.
What I can say, is having analyzed 150 years of price action, financial entropy is starting to rear it’s head. If this is in fact starting price action of a supercycle wave (IV). The buy and hold strategy is dead. This will be a traders market for at least the next two decades, or more. Case in point…observe the area in the red box on the above chart. This area is a primary circle wave 4 of one lesser degree within a cycle wave III. That wave 4 consoldation lasted from 1996 until the beginning of 2013. That was manageable. That was also 17 years of price action digestion from the previous 1974 stock market bottom.
Since our previous supercycle events, we have experienced wars, advancements in technology, medicine, migration patterns OH AND WE EXPERIENCED a global pandemic. Mirroring what led up to previous (I), (II) wave degrees.
I don’t post this to scare readers, nor do I seek ANY attention. I do not ever see myself as being referenced as the trader who called the top of some market in some time. I forecast these things to evaluate if I can make money as a trader from the forecasts. In conclusion, I’ll leave you with one of the wisest quotes I ever heard as it pertains to what I wanted to achieve as a trader when I started. Its not from a wise greek philosopher. Its from Cuba Gooding Jr. in the 1996 movie Jerry Maguire.
“I’m already famous…now just show me the money”
DJIA - Bull Market in Early Stages, More Upside in Near TermThe Dow Jones Industrial Average (DJIA) has given a fresh breakout, rallying above the 35,500 level. The breakout comes after the DJIA has been consolidating in a range for several days. The strong move above 35,000 is a sign of bullish momentum and suggests that the DJIA could continue to rally in the near term.
The breakout of the Dow Jones chart is a bullish signal for the stock market. It suggests that the bull market is still in its early stages and that there is more upside potential in the near term. However, it is important to remember that the stock market is volatile and that there will be pullbacks along the way. Investors should remain disciplined and focus on the long-term trend.
Here are some additional factors that could support further gains in the Dow Jones chart:
Continued earnings growth from US companies
A healthy pace of economic growth in the US and globally
Increased risk appetite among investors
However, there are also some risks to the outlook for the Dow Jones chart:
A slowdown in economic growth
Any rise in interest rates
Increased geopolitical tensions
Investors should carefully monitor these factors and adjust their investment strategies accordingly.
DOW JONES The Inverse Head & Shoulders no-one is talking about.The Dow Jones (DJI) index remains within its 5 month Channel Up pattern that started in mid March and recently hit its top. What the majority of the market is missing is a stronger pattern on the wider 1W time-frame. This long-term chart shows that an Inverse Head and Shoulders (IH&S) pattern priced its Head (bottom) when the Channel Up started and completed the Right Shoulder on the first week of July.
As a result, the aggressive 3 week rally that followed is a natural consequence of the completion of that pattern, similar to the October - November 2022 rally that led to the start of the IH&S. Such patterns can technically target as high as the 2.0 Fibonacci extension level, which sits just above the 36975 All Time High. As the 1W RSI is bounce on a Pivot level (formerly a Resistance), we have more reasons to continue to be bullish in this market and target first the 35900 Resistance and ultimately the ATH at 36975, potentially all within the boundaries of the Channel Up.
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Dow Jones - 10/08Pair : DJI - Dow Jones
Description :
Completed " 123 " Impulsive Wave
Falling Wedge in STF and Rejection from UTL
S / R Level
Fibonacci Level - 38.20% / 50.00%
Divergence - RSI
Weekly Update: Are we Headed for Bad Times?I have been on Trading View for almost a year now. In that timeframe I have been fortunate enough to have almost 2,600 people who follow my work, shared almost 700 ideas within that community, and founded my website for paying members.
Yesterday, we held a training / education Zoom call and dissected the move up off the October low of 3502. The purpose of this call was to strictly adhere to EWT rules & guidelines as we went through the chart literally day by day. The quick version of the outcome of that call was we have topped in the primary B countertrend rally. This conclusion was reached largely because of 2 major areas of focus from the October 2022 lows. The initial pattern, and the final impulsive portion of the pattern from March until the recent highs. Now I know most people may find this hard to accept. I fully expect the comments section to be lively but the notion of the initial portion of the pattern started off as a leading diagonal, is just plain wrong .
Please allow me to explain.
In preparation for this training, I spent time putting together my deck of slides, with an agenda to refer back to the live chart. As I went through the pattern and spotted what some Elliottitions would consider a leading diagonal off the 3502 bottom, I decided to spend some time researching Leading Diagonals. The reason being the theme of the call was the proper application of EWT rules and guidelines. So I wanted to be sure I was not assuming when I applied rules associated with ending diagonals to leading diagonals.
What I found was eye-opening to me because I never questioned what LD’s were. Like some, I have always applied diagonals (ending or leading) as 3,3,3,3,3’s. For the Elliott Wave uninitiated this would be a series of abc’s but labeled as 1,2,3,4 and 5 with the 4 overlapping the 1.
NOT SO FAST!
My research turned up that although Ending Diagonals are a legitimate Elliott Wave pattern with governing rules, the larger EWT community is not 100% agreed on Leading Diagonals. Here’s an excerpt from AJ Frosts and Robert Prechter’s book, “Elliott Wave Principle”.
Leading Diagonal
It has recently come to light that a diagonal occasionally appears in the wave 1 position of impulses and in the wave A position of zigzags. In the few examples we have, the subdivisions appear to be the same: 3-3-3-3-3, but the jury is out on a strict definition, as 5,3,5,3,5 that overlap are also accepted. These patterns were not originally discovered by R.N. Elliott but have appeared enough times and over a long enough period that the authors are convinced of their validity. The notion of an LD is a relatively new idea that, in truth is accepted among many Elliottitions, but not all due a lack of governing rules.
Well, I now have a quandary with respect to my upcoming zoom call with my membership. The entire basis of the call is the proper application of EWT Rules and or Guidelines. If there are no agreed upon rules, let alone guidelines, what do I do when the call begins and we start to examine the initial pattern off the 3502 bottom?
I had already announced and scheduled the call.
I decided to apply both loosely mentioned counts to this pattern (3,3,3,3,3 and 5,3,5,3,5) …and guess what? None of them apply. Not even close. You can go through the pattern yourself and what anyone is going to come away with when analyzing the initial pattern from 3502 on October 13, 2022 to the high of 4180 on December 22, 2022 is a an abc. If you have any doubts here’s the pattern zoomed in.
So, based on the initial pattern being an abc...this entire move from start to finish was going to be corrective, or a countertrend advance. Trend being down.
The last portion of the pattern that is impulsive starting in March 13th, 2023 until July 27th, 2023 should be labeled as following:
C waves will normally terminate at the 1.618% fib extension....in which price did.
Therefore, I firmly believe we have topped based on the fact that the leading diagonal may not even be a legitimate Elliott Wave pattern at worst, and at best, if it exists, has loosely based governing rules or guidelines. Lastly the impulsive portion of the pattern from March to July terminated at 1.618% of the initial pattern. I think it's a VERY VERY high probability we topped in July....and more importantly...should lead to a decline that could signify bad times ahead.
Best to all,
Chris
The Sentiment CycleTrader Sentiment is of the utmost importance as it pertains to price action. The attached is one that will be updated from time to time as my followers can see how the various bullish and bearish sentiment plays into the price action.
#SP500 Update $SPYI keep watching for indications of trend tiredness, such as an ending diagonal pattern backed by divergence against the RSI, despite the market's persistent ascent. I believe I have located the little wave c that is marked with the numbers 12345 in grey letters. However, I believe that this is not the end and should be followed by wave c of (y) that is larger in magnitude, which began in June. And based on what has occurred thus far, I would anticipate another, even larger diagonal - C of (X) - to bundle everything together. Too many expectations, and they must all be met one by one.
DOW JONES Sell signal at the top of the Channel Up.Dow Jones reached the top of the 4 month Channel Up today just after crossing above Resistance (1).
The MA50 (1d) is the first Support of this pattern and has been untouched since July 10th.
Trading Plan:
1. Sell on the current market price.
Targets:
1. 34450 (expected course of the MA50 1d).
Tips:
1. The RSI (1d) is has formed a top pattern, same as April 13th and June 15th.
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Notes:
Past trading plan:
TARGET REACHED Dow Jones to 34,826Cup and Handle formed, broke out and since then it's been a slow but consistent move up.
The only frustrating part with holding a trade like this since March is that there are these daily CFD Swaps which eats into the profits.
And when you hold for >2 months, you start to feel it. Anyway, the bias was right and I might need to lower the target in the future so we don't hold these trades for too long.
The first target reached 34,826 and the next target will be higher. We just need to wait for the next breakout pattern and I'll let you know.
DOW JONES is starting a 1 year Expansion phase.Dow Jones (DJI) has been on a bullish leg after it broke above the 1W MA50 (blue trend-line) and turned it into a Support. If we see the bigger picture on this 1W time-frame, we can relate to the 2015 - 2016 fractal, where the current sequence was the final bullish signal before a 1 year expansion phase. Even the 1W RSI patterns are identical and the Arc appears to be on its end.
As a result, investors should feel more comfortable buying stocks on a long-term horizon, especially as long as the 1W MA50 holds. After tested as Support on June 27 2016, it wasn't broken until October 22 2018, almost 2.5 years later!
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DOW JONES Starting to turn into sell with overbought RSIDow Jones crossed over even Resistance 1 (34950) and is getting very close to the top of the Channel Up.
Along with the RSI (1d) entering the 70.00 overbought zone, the index is starting to give the first sell signal.
Trading Plan:
1. Sell from the current market price to Resistance 2 (35535).
Targets:
1. 34150 (potential contact with the MA50 1d).
Tips:
1. Every Higher High rejection inside this Channel Up was made on a Double Top could. That's the reason for us providing a sell range.
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Notes:
Past trading plan:
Dow Jones experiencing a major chart upside breakoutA bullish chart pattern has been completed by today's rally. This week's low is my defensive point in long positions.
DOW JONES getting closer to Resistance Zone for a technical sellIt's been a while since we looked into Dow Jones (DJI) and made the bottom buy on the Channel Up last Higher Low (chart below):
Right now the index is rising after a rebound on a Double Bottom on the 1D MA50 (blue trend-line). The dominant pattern is a Channel Up and the secondary a Diverging Channel Up (dotted lines) that forms a Higher Highs rejection zone within Resistance 1 (34530) and its top. We will look for a sell on the next candle inside it (ideally with the 1D RSI on its Resistance Zone) and target the bottom of the Channel Up at 33650 near Support 1.
If however the price breaks above Resistance 2 (34950) and the MACD maintains the Bullish Cross it is forming today, we will open a buy and target 33500 (just below Resistance 3).
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Dow Jones showing upside with bullish breakout patternsThere are many bullish breakout patterns in the process.
On a larger scale there is an Inverse Head and Shoulders.
On a smaller scale, there is a Box Formation and a W Formation in the making.
We just need the price to break above and out of the formations, to get our confirmation.
Other indicators confirm including:
7>21>200
RSI>50
Target 36,426
SMC
Sell Side Liquidity is showing below the W Formation where Smart Money comes down and sweeps the selling from the retailers as they buy into it.
NOW WE WAIT!
ES Futures Primary AnalysisI'll keep this brief.
The area on the chart where purple 5 resides best counts as a 3-wave structure. Therefore, in my primary analysis, I am counting this as an irregular b wave that made a slightly higher high and now we should be heading into the 4370 area for our black c wave of 4. I have a purple alternative 5 on the chart because there is a chance of wave 5 truncation...but that is only confirmed with a breach of 4260. If my primary analysis is correct, our black wave 5 should conclude in the area of 4519-4530.
Therefore we await more price action.
Best to all,
Chris
DOW JONES: pulling back to the 1D MA50 again.Dow Jones has had a technical HH rejection at the top of the dotted Channel Up and just as quickly, the price is approaching the 1D MA50, which offered support on the June 26th rebound. The 1D technicals are neutral (RSI = 48.089, MACD = 156.460, ADX = 28.256) indicating that the 1D MA50 is now the pivot level: as long as it holds, expect the price to bounce on it again, so we will buy and target the R2 (TP = 34,95) but if it closes a 1D candle under it, sell and target the bottom of the dotted Channel Up (TP = 33.000).
The strongest buy opportunity on a four month basis is when the RSI hits its HL trendline.
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06072023 - #DJIAAs mentioned, DIA is very much bearish based on price action. Price is now at the edge of the BZ and also at a strong support. Watch this level with NDX 15163 and SPX 4433. If market can hold these 3 levels, look for a possible bounce during European session to DJIA 34323 and even 34363 before further downside.
DOW JONES Take profit soon. Pull back expected.Dow Jones is almost on Resistance (1) at 34530 with the top of the dotted Channel Up just over it at 34700.
That is a level where the buy profits from the MA50 (1d) buys should be realized and then wait for a break out or pull back in order to continue buying.
Trading Plan:
1. Sell within 34600 - 34700.
2. Buy if the (1d) candle closes over 34700.
3. Buy on the MA200 (1d) at 33500.
Targets:
1. 33500 (MA200 1d).
2. 35400 (near the top of the yellow long term Channel Up).
3. 34900 (Resistance 2).
Tips:
1. The RSI (1d) is posting a sequence similar to the February top. That started a significant medium term correction.
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Notes:
Past trading plan:
