S&P 500 Futures Swing Short TradeThe Biggest Bull Trap I have Ever Seen
Fed will crash the market on FOMC and NFP this week
buckle up
Es!1
If SPY Breaks Above $410 - we could see $420+ very quicklyBreaking above the $410 resistance level could be a very big sign that bullish price trending is building momentum.
Ultimately, I don't believe the SPY has enough momentum to get above $440~450 in 2023 - but I could be wrong.
I do believe we will move into a bout of sideways congestion after Q1:2023 - and slide into a period of complacency.
Near the start of Q3:2023, I believe we will see the bullish price trend resume - likely starting a push towards new all-time-highs again.
We are certainly living in interesting times.
If you are not following my research - please take a minute to review my posts/comments.
Here we go.
Morning Update (Early): Thought Experiment for Fed DayLet's do this early? Huh? I'll be able to sleep in tomorrow morning...yeah!!!!!!!!!
First, Let’s revisit some things for new readers of my work.
On occasion I will make a detailed, but educated, guess on the direction of the markets strictly based off the charts. Typically, these would be done on days of perceived high volatility due to some news or event that is occurring. These so called “thought experiments”, were originally posted to try to make the case that news or events do not move markets, they are mere catalysts to substantiate an already existing outcome contained in chart analysis. I started doing these because as I posted and shared my analysis I would typically be inundated with comments or direct messages asking how would the Fed, the release of CPI, GDP, etc. affect my current analysis.
I simply got tired of saying, “It Doesn’t”.
So in an attempt to communicate to my followers that I wasn’t just being arrogant in the protection of my analysis, I attempted to game the price action prior to the big event in what I termed a “Thought Experiment”. Today’s “TE” would be my sixth post front running big news with my thoughts on the ensuing price action.
I think my followers would agree with me when I say I think I have proven my original point by now.
Nonetheless, I have been asked to do another so here it is. Now I will tell you what most already know. This pattern off the October lows of 3502 and the subsequent December 22nd low of 3788 has frustrated me. My problem with the October low is the manner in which we bottomed. I cannot make out a clear 5 waves down into 3502 on the smaller timeframes. Some practitioners of Elliott Wave don’t mind looking past such issues. To me, these little clues should tell us something about the pattern we’re embarking on. Since the October low we have risen but in a very overlapping manner. I could say the same for the rise off the December 22nd low. I have been calling for a larger b-wave rally into the 4300-4500 area of the SPX futures but this pattern has not been clear to me that is ready to do that. I admit that. Our larger a-wave took 10 months to complete. We're going to head up and complete our larger b-wave in 3 months? Maybe...but I just have a hard time buying into that.
So in a position where I am unclear about the overall pattern I have to go with what I think makes an already unclear pattern, clear. I could be totally wrong...but WTF.
Here’s my Thought Experiment for Fed Day:
1. I believe we open up down tomorrow morning in the cash market.
2. we spend the vast majority of the day moving flat to up but nothing impulsive. (Range prior to fed announcement 4050 low end to We close the gap from the open)
3. Upon the fed announcement we spike up into the area of 4140 to 4154 conclude our ED pattern.
4. Post 2:30 Powell conference call...we begin to decline impulsively.
Sidebar: If this does happen this would mark the second time we have come into this area and been rejected. I think if this does come into play it really sets us up for the red count. This becomes a reversion to mean trade in my opinion. Traders overshoot and undershoot all the time. They tend to live on the margins of extreme. Personally I hope we just decline to 3700's and be done with this so we can spend the vast majority of 2023 grinding higher. But the ED count is intact and I have to go with that pattern as of the writing of my morning update.
Now I will conclude with THIS IS A GUESS AND I WOULDN'T TRADE THIS. I have to admit...these "TE"'s are exhausting because I have to spend a considerable amount of time looking at multiple charts (SPX, ES) on multiple timeframes....so even if this plays out perfectly....it doesn't mean I'm genius by any stretch of the imagination.
Let's see how things shape up tomorrow and where we are in the aftermath of tomorrow . I think the clues will be invaluable. But I have to say #sub3788hurryupalready
Best to all,
Chris
IMPORTANT NOTE:
SOMETIME BETWEEN MID AND END OF FEBRUARY I WILL ONLY BE POSTING ONCE PER WEEK HERE ON TRADING VIEW. I WILL ONLY BE DOING WEEKEND UPDATES. THE MORNING, EVENING AND SPECIAL UPDATES YOU HAVE RECEIVED IN THE PAST WILL NO LONGER HAPPEN. AS I GET CLOSER TO CHANGING MY POSTING SCHEDULE ON TRADINGVIEW.COM I WILL UPDATE MY FOLLOWERS HERE. CHECK MY PROFILE AREA FOR DETAILS.
#ES_F Tuesday 1.31.23 Prep Review: Sunday Globex opened right at key level of 4084-7, attempted to get back over but failed trapping the buyers and yesterdays end of day supply above. We sold got the move lower which broke 4061-56 and found buyers at lower support area of 4046-42 pre market. At RTH Open we corrected short inventory back to our Resistance area of 4084-77 where more sellers stepped in. Selling back down and holding under 4061-56 was showing us that this is now our resistance making possible target at 4046-42 which was already tested multiple times and T2 low below it at our 4031-25 Support. We did get our move lower but it happened towards the end of the day which makes us think there are still buyers below and we didn't have enough supply to break it just yet. Good trades today from resistance down, stayed with the trend.
Overview: We are currently in distribution mode and our range is 4077-4030, we got up against big resistance last week and trapped some more supply over 4084 which we saw today coming out under 4061. We had enough short covering today to keep us up over resistance and not test T2 Low which was at key support until end of day... does that tell us that the buying is so strong and keeping us up or are we just taking our time dropping the bid lower to not scare off willing buyers? Tonight our nearest Resistance is at 4046-42 and Support is at 4030-25 since we are in distribution mode we are not sure when they will be done and ready to move out of this range. We are currently below T2 range but inside Previous Day range, as long as we are holding under 4061-56 that is a sign of continued weakness from above but must see a break of 4030-25 for first sign of lower continuation and then get under 4012-08. For signs of reversals to the upside we must hold 4030-25 and start taking out higher resistance areas and especially holding over 4061-56. Can we stay in distribution range until data starts hitting this week to bring more volume or will we make a move outside the range again?
Levels to Watch:
Daily Resistance: 4123-4084 Intraday Resistance: 4084-77 // 4061-56 // 4046-42
Daily Support: 4012-3988 Intraday Support: 4030-25 // 4012-08 // 3994-89 If Broken then 3957-53 // 3944-40
Back to the bigger picture - ES/SPX 500I have been fixating on 3600 as a possible low coming in March for a few reasons - 1. weekly and monthy BB are close to each other at that level (the October 2022 low was also monthly and weekly BB support) and 2. the monthly 50ma is near there as well.
I tried a few more pitchfork ideas, and right now this is the one I like best. If we get to the median line by mid March, it will be approximately 3600, give or take. If the weekly rsi comes down as hard as I suspect it may, then we may see weekly hidden bullish divergence at strong support. I also recently saw an article quoting investors as being in a agreement that a new low is coming this year. I don't doubt that a new low will come eventually, but this year would be unlikely if this 3600 support holds. finance.yahoo.com
" Roughly 70% of the 383 respondents in the survey say the stock market has yet to hit the bottom. The biggest weighting — 35% — says the lows won’t be in until the second half of 2023. "
Evening Update (Early): Have we already Topped?I guess that's the big question...Have we Topped, or does this rally continue?
Although we end up in the same place, the green b-wave (is the black count) it just supposes we topped already and the ending diagonal will eventually become invalidated. I placed that b-wave there ONLY because we have a full pattern as of now. But not to get ahead of myself so far the ED is playing out nicely so a lot of potentials. Additionally, I broke the red count out of the closet. Although a low probability, it is a valid count.
In this morning's update I stated..." In the 4008-4009 I may open a small long position. I’ll update if I do. "
Very soon after I published my morning update I bought, Initially , as a hedge 3 ES contracts at 4008. I updated the morning update post as I moved stops higher and eventually sold all 3 at 4057 for $7,350 in profits on the day. Since my short calls generated just under $12,000 in profits... I didn't want to waste $7k protecting $12k. Therefore I'll restrike higher if I have to as it would seem I have almost 250 points of perceived safety. This puts me at approximately $19,000 in potential profits for February so far. I say potential because my short calls do not expire till end of February.
Tomorrow we have Fed Day. As a reminder my followers have coaxed me into posting a Thought Experiment for Fed Day. Look for that in my morning update tomorrow. Thanks for having me stick my neck out... it's all in good fun.
Sorry this post is early but I have plans this afternoon and won't be in a position to post this evening.
Best to all,
Chris
IMPORTANT NOTE:
SOMETIME BETWEEN MID AND END OF FEBRUARY I WILL ONLY BE POSTING ONCE PER WEEK HERE ON TRADING VIEW. I WILL ONLY BE DOING WEEKEND UPDATES. THE MORNING, EVENING AND SPECIAL UPDATES YOU HAVE RECEIVED IN THE PAST WILL NO LONGER HAPPEN. AS I GET CLOSER TO CHANGING MY POSTING SCHEDULE ON TRADINGVIEW.COM I WILL UPDATE MY FOLLOWERS HERE. CHECK MY PROFILE AREA FOR DETAILS.
Morning Update: ED on Shaky GroundThis morning the ES is declining just below the ideal spot to continue to support this ED pattern. Last night I advertently type 3990 for ED invalidation. Its 3980. 3980 represents the .884% retracement area and last fib retracement and a very uncommon area used by Elliottitions . This decline should ideally hold the .618% - .786% zone. Nonetheless, if for some reason price breaches 3980 today this ED count will be invalidated. So far, I believe this move down will hold at 4008-4009 which is the 1.0 extension of this decline from Friday's peak of 4109.25.
Below is a close up of the ED.
You can see after the 1-2, each subsequent retracement should land within the ideal area of the .50% and the .786% Fib Retracement. Our b of c of 3 landed right at the .618%. We are just below the .618% retracement now for our wave 4. The .786% resides at 3994, .884% at 3980. In my opinion, below the .786% by much is a big clue this will not complete as an ED. So this ED could be on shaky ground...but let's see if today provides further clues for tomorrow.
In the 4008-4009 I may open a small long position. I’ll update if I do.
Tomorrow's morning update will be my Thought Experiment for Fed Day. Thanks to all for participating last night.
Best to all,
Chris
IMPORTANT NOTE:
SOMETIME BETWEEN MID AND END OF FEBRUARY I WILL ONLY BE POSTING ONCE PER WEEK HERE ON TRADING VIEW. I WILL ONLY BE DOING WEEKEND UPDATES. THE MORNING, EVENING AND SPECIAL UPDATES YOU HAVE RECEIVED IN THE PAST WILL NO LONGER HAPPEN. AS I GET CLOSER TO CHANGING MY POSTING SCHEDULE ON TRADINGVIEW.COM I WILL UPDATE MY FOLLOWERS HERE.
Evening Update: ED pattern is Filling In but is that reality?Today we got a little retrace and so far our Ending Diagonal pattern is intact. This would mean we should get one more high into the 4130-4170 area but well within the confines of the trendlines. If the ED is playing out then price should come into the .618% of the previous move up which would be 4018-4021 area and bounce to approximately the 4130-4170 area. Now, I have stated this before, but to be abundantly clear...we have enough waves in place to consider this retracement a full pattern.
Therefore, if price were to decline lower than 4018...and breach 3990 the ED is invalidated. If 3990 is breached on this move down then we look to 3901.75 to hold but in truth we stand a high chance of heading to the 3850 area, but more than likely sub 3788 becomes the ultimate destination.
One of my followers @Only_Losses wants to do a thought experiment for Fed Day. You guys know the drill ...I have to do what my followers request so if 25 replies to this evening update say "Do it" I will hang my neck out to dry...expose it to ridicule for the world to see. But only if at least 25 of you want to see me experience that pain...lol.
Best to all,
Chris
ES Daily time frame, down trend lineThe ES daily time frame is in long term bearish
trend. The market is near the down trend line
and if resistance holds. It is expected the market
to push bearish. There is a future support level
below the market that would make an ideal
target price point 3546.50 about -1,913 ticks
below the market. As long as the market stays
below the daily down trend line. It will be a good
idea to turn to the one hour time frame and to
look for high prices in the sell zone.
SPY COVID Correlation - 119pt BOTTOMI just noticed this (should have seen it earlier).
In the midst of a GLOBAL ECONOMIC COLLAPSE, the SPY fell a little over 119 points before bottoming. My interpretation of this move is that traders/investors suddenly realized the US/Global markets would continue to function - even in the midst of a global lockdown.
Now, fast-forward to 2022.
Hey, guess what. The range from the peak in early 2022 to the bottom in October 2022 was just a little over 119 pts.
Correlation or coincidence?
Can we try to equate this -119pt contraction to a global crisis event (like COVID) - where the entire globe moved into LOCKDOWN?... Um. NO.
Are we seeing global financial conditions tighten as central banks raise rates? You bet.
If this the end of the move? I'm not sure, but it would appear to be lacking any global crisis event - we could have already seen the low/bottom in October 2022.
I have a funny feeling the -119 price contraction will come into play in the near future.
Are you following my research yet?
S&P500, Long term Price Action OutlookSP500
Hello traders, welcome back to another market breakdown.
Here is an outlook on the stock market state for the year 2023 and the kind of scenarios we might have in the future.
Trade safe,
Tarder Leo.
SPX Model Trading Plans for MON. 01/30The FOMC Decision Week - Day 1
With the FOMC Interest rate decision due this Wednesday, the markets may re-remember the interest rates factor. Whether the Fed's decision and the tone surprises the markets in either direction is going to determine if there would be a reversal or continuation of the recent melt-up in the markets. But, until that happens, the momentum seems to be consolidating.
Positional Trading Models: Our positional models currently are in a neutral bias. Models indicate going short on the close if the daily close is below 4040, with a 35 point trailing stop and a 9-point trailing stop to trigger once the short touches 4020.
By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an instrument that trades beyond the regular session, with the trailing stops - if any - being active in the overnight session.
Intraday/Aggressive Models: Our aggressive, intraday models indicate the trading plans below for today.
Trading Plans for MON. 01/30:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4051, 4044, or 4017 with a 9-point trailing stop, and going short on a break below 4048, 4039, or 4014 with a 9-point trailing stop.
Models indicate no explicit long exits and no explicit short exits for today. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 12:01 pm ET or later.
By definition the intraday models do not hold any positions overnight - the models exit any open position at the close of the last bar (3:59pm bar or 4:00pm bar, depending on your platform's bar timing convention).
To avoid getting whipsawed, use at least a 5-minute closing or a higher time frame (a 1-minute if you know what you are doing) - depending on your risk tolerance and trading style - to determine the signals.
(WHAT IS THE CREDIBILITY and the PERFORMANCE OF OUR MODEL TRADING PLANS over the LAST WEEK, LAST MONTH, LAST YEAR? Please check for yourself how our pre-published model trades have performed so far! Seeing is believing!)
NOTES - HOW TO INTERPRET/USE THESE TRADING PLANS:
(i) The trading levels identified are derived from our A.I. Powered Quant Models. Depending on the market conditions, these may or may not correspond to any specific indicator(s).
(ii) These trading plans may be used to trade in any instrument that tracks the S&P 500 Index (e.g., ETFs such as SPY, derivatives such as futures and options on futures, and SPX options), triggered by the price levels in the Index. The results of these indicated trades would vary widely depending on the timeframe you use (tick chart, 1 minute, or 5 minute, or 15 minute or 60 minute etc.), the quality of your broker's execution, any slippages, your trading commissions and many other factors.
(iii) These are NOT trading recommendations for any individual(s) and may or may not be suitable to your own financial objectives and risk tolerance - USE these ONLY as educational tools to inform and educate your own trading decisions, at your own risk.
#spx #spx500 #spy #sp500 #esmini #indextrading #daytrading #models #tradingplans #outlook #economy #bear #yields #fomc #fed #newhigh #stocks #futures #inflation #powell #interestrates #earnings #earningsseason #chinareopen
Morning Update: Waking up to DownsideThis morning the ES futures are down -43.50 to 4040.75 or just over 1%. I would venture a guess this is repositioning on the heels on Fridays OPEX. This micro structure is underdetermined to be impulsive or corrective as of my morning update.
Below shows the difference.
I am still unclear as to what this larger pattern will ultimately conclude as. First thing is I am watching the micro pattern to see if we finish as an impulsive 5-wave pattern...which could still be an a-wave. As I stated over the weekend, and prior to that, this retrace will provide the answers we need. This pattern is officially busted below 3901.75. So we have a lot of room the chop around before we get answers. I would prefer price stay below 4072 (wave 1 low on micro chart) until it hits the 4007.50 level. That would provide downside overlap and continue to cloud the direction of price.
I'll update during the day if anything crazy happens which I do not anticipate.
PS: I am still short -25 4300 Feb EOM calls which are now profitable.
Best to all,
Chris
Nasdaq NQ - Unpopular Opinion #2,118: 14,000 is ComingEverywhere I look I hear the narrative that we should be making new lows and everyone should be dumping because the Federal Reserve won't pivot and because the inflation keeps going up.
Yet, at the same time that they make that argument, they completely ignore what the Dow Jones did in October, which was no less than a 4,300 point rally forming an outside bar.
Dow has always been the weakest index. It fell farther during Coronavirus Disease 2019 hysteria. It rallied less during the greatest bull market of all time. It dumped more during this year's corrections.
Yet, the Nasdaq and the SPX have lagged it, and lagged it hard, during last month's 2022 Low of the Year recovery.
This should have any bull's interest piqued, and yet, because prices are low, they're not. People just want to get short. Everyone is telling you to look below October's low.
Sometimes I think to myself that people actually like buying high and selling low, if only because they're just very attached to "seeing" and "confirmation." Ordinary people all follow this idea that "I won't believe what I don't see" and are completely unwilling to exercise even a modicum faith.
It's fundamentally irrational.
Yet, if you never change this deficiency, you will never be able to leave the bottom of the Cosmos and the bottom of life. The whales will always eat you, for you will always be plankton.
As with all fractals, take a step back and look at the wider horizon. Nasdaq would have to fall another 10% from its October LOY to bounce off the pre-COVID highs, something which that pesky Dow already did in June.
Not only that, but Nasdaq left two really significant areas of low volume on its way down this year. One of those areas just happens to be right above the August bear market rally highs.
Taking a look at the weekly, we can see that for six straight weeks, Nasdaq trades under equilibrium for the total COVID-panic <--> all time high range.
When people who are trading billion dollar position sizes take a look at this phenomenon, they're looking to get long, but hedging short. Unlike retail, who wants to buy puts thinking that 6,000 will come on CPI Thursday.
On the daily, we can see that there's a lot of manipulation around this trendline superstition. "Meh June low trendline support has become resistance. This is going down!" is what every retail trader has been Pavlov's Dogged into believing and thinking.
Nasdaq tends to be the most wild of the indexes. If Nasdaq had have traded like the Dow just did, it would have traded to 13,000 points.
Assuming that SPX and Nasdaq follow in the footsteps of Dow in this bear market rally, and don't kid yourself, Friday's price action should indicate to you that we're going higher, not heading for new lows, Nasdaq is likely to be more insane than the Dow, and very likely to take out the August bear market high.
While all and all I believe you're looking at a pending 30% rally, from where we stand now, you have 1,000 points to gain being long just to take out the October equal highs. This is enough to formulate trades with and make some good money on without having to take on a lot of risk.
Specifically, some of the key (and not-so key) tech stocks are set up to go totally rocketship. At least in my opinion:
AMZN Amazon - Realistic Expectations In Both Doom and Gloom
&
META Facebook/Meta - Too Much Bear, Not Enough Bull
&
BBIG Vimco Ventures - A Classic Triangle Pump
Trade carefully. When the Chinese Communist Party falls, it will happen while the US equities market is closed. Indexes will gap down 20% and stocks will gap down 50%. There won't be a recovery because every single bank will be completely risk off.
Almost all of Wall Street has dirty hands providing financial "blood transfusions" to the most evil and murderous regime in all of human history, one which despite having killed many times more people than Hitler, and having perpetrated the organ harvesting persecution of Falun Gong practitioners, has not only remained in power for more than 100 years, but it and its Marxist-Leninism is supported by virtually every government and its people in the whole world.
A lot of people, institutions, governments, and companies will run for their lives the day that Xi Jinping throws the Party away like Gorbachev threw the USSR away, because the nature of having a closet full of skeletons is that once sunlight is cast upon those unprecedented sins, the game ends in Checkmate.
"What an ordinary person believes can happen and what is actually happening are always two totally different things." -Lord Wrymouth
Irregular Expanded Flat on $SPXAs mentioned previously, this is my theory as of what is to come for the SPX.
The fractal is from 2001-2003 as a similar bull trap had played out in the disguise of a "W" recovery or Inverse Head & Shoulders - whatever you wish to call it.
I have also included the alternative, which invalidates the expanding flat corrective wave as per Elliott Wave Theory - closing above $4328.
FED meeting next week will set the tone for what is to come for the market along with yet another rate hike.
We also have several other giants who have yet to report earnings in the following few weeks.
Trade safe out there!
For reference: elliottwave-forecast.com
Special Weekend Update: Looking to the SPX for direction THIS IS A LONG POST SO IF YOURE NOT A BIG READER THIS IS YOUR WARNING:
Today I wanted to try something different and look at the cash market and go through all the scenarios objectively. For those traders who have ever wondered which chart is the chart to determine the direction of the SP500, the SPX cash market or the ES futures ?
It's the SPX cash market.
I have said many times previously that each chart should be considered its own story. The ES (in the above main chart) is a different instrument than the SPX.
Question: Then why even track the ES if our goal is to determine the direction of the SPX?
Answer: For me as a trader I trade ES futures, so why would I track the cash market?
It's a good question. But in truth I do not seek profits in the SPX. I primarily deal in futures options. This post is not about why I choose to do that...that's a conversation for another time. However, when I am selling a strike price and choosing what expiration cycle, the ES is going to provide me the information I need to make those decisions. However, I do think it's a relevant endeavor to check in on the cash market chart to see if it gives me clues or insight into the ES chart. The last thing on this subject I'll share is the ES chart is far more complex. I would even go as far as to say it's twice as complicated as the cash market chart. The overnights provide complex patterns in a low volume environment that as an analyst sometimes can make things very challenging to analyze. But let's dive into the cash market and see what clues, if any, we can ascertain. This post supposes NO BIASES. Bullish or Bearish...I'm looking at all the potential scenarios.
We start from the October Lows:
BLUE PATHWAY
Highlighted in Blue I can count a leading diagonal off the October lows. Now a leading diagonal is a motive wave, which means the prevailing trend is now up, and we should be able to count a 5-wave structure into its ultimate conclusion. If the blue count is correct, then this supposes the October lows could be the bottom for the bear market. Why is that? Because we look for corrective patterns to end and reverse-trend upon observing the developments of motive waves. Motive waves are confined to impulsive 5-wave patterns and diagonals. Nonetheless, I can count a leading diagonal in 5 overlapping waves, followed by corrective price action in a 3-wave structure equating to a wave 2. Currently I would state that price now appears to be in its first subdivision wave 3 (i of 3)...with one caveat, we should be targeting the .618% to .786% fib extension. The .618% extension resides at 4140.81. However, price has yet to breach the 4100 level. This level in the cash market has been rejected twice before. So, if price can get above the 4100 level and stay there...the blue pathway is intact and must not be ignored.
Blue Pathway Conclusion: I would say the next week should provide enough price action to breach the 4100 level and see some sort of reaction to the .618% area of 4140.81. If price does get as high as the 4140.81 level, I think it’s time to adopt a more bullish perspective. However, under the blue pathway if at any time price breaches 3764 then this pattern invalidated. Now 3764 is a long way away from where we are now...so you see price can decline by a lot and still not invalidate the bottom is in thesis. Therefore, the blue pathway has a lot going for it as of now. My issues with the blue pathway are this all starts with a diagonal. Diagonals are notoriously unreliable patterns because they can be interpreted as something else as I will explain next.
BLACK PATHWAY
Highlighted in Black
The black pathway, in my opinion, is a safer pathway for traders to adopt because it doesn’t suppose we are impulsive. You see under the previously explained blue pathway, and impulsive considering the leading diagonal start would point to the possibility of ending as high as minimum target of 4846 and as high as 5349.75. That’s new highs. So, to adopt that analysis and not consider the black pathway which could reach only 4220.39 to 4372.01. The risk here is waiting for price to reconcile higher (blue count), only to find price at NEW LOWS and not new highs. As a trader, price must prove its intentions to me every step throughout the structure. I have received many direct messages criticizing me about the fact that I typically will feature 2, and on occasion 3 potential outcomes on a chart. I have no idea why readers think I should tell them the future of where price will go and give them one outcome. People who read my posts, or who choose to follow me, get my personal trading strategy annotated on a chart who is seeking to profit from his analysis...not provide readers with a money back guarantee. Formulating a trading strategy around the black pathway (which could finish around 4200-4400) is infinitely less dangerous than the previous blue pathway. However, you’ll notice the two pathways follow an initial similar path.
Black Pathway Conclusion: Clearly, I favor the black over the blue pathway mainly for risk management purposes as price approaches the 4200-4400. I have no problem with the black pathway. I have only a slight concern that the “b” wave bottom struck on 12/22 was too quick to be all of the b-wave considering the length of the previous “a” wave. There is no Elliott Wave rule that substantiates my concerns with respect to duration. Let’s just say my intuition is this area will be revisited before going higher. Now my concerns will be alleviated if price breaches 4100 and stays above it. We have come into this area (the area we are now) twice before. If three times is a charm...prove it.
GREEN PATHWAY
Highlighted in GREEN ARROWS
Now, as an analyst, the green pathway solves all my concerns. It fits within the rules of EWT, and It solves not only the issue I have with duration, it solves the overlap issues I have with the leading diagonal (how we started) and the overlapping issues afterwards. It also catches most of the traders off guard as witnessed in the put/call ratio. I will acknowledge sentiment was extremely bearish in October and a retrace of some magnitude was warranted and we’re getting that now. But recently I have taken to listening to the live CNBC stream on my phone while in the office as back ground noise. I noticed the other day; I get the sense from the CNBC guests that sentiment is bullish now, or at least getting more bullish. I see that bullish (or at least constructive) view show up in the fact that traders, by and large, are not too protected from downside. The P/C ratio in the ES on Friday got down to 1.3 that means slightly more traders are buying puts than calls. The normal P/C ratio in the ES is around 1.75-2.0 during uptrends.
Green Pathway Conclusion: I favor this pathway because it solves the time duration between the a-wave and the b-wave. It also reconciles why we have so much overlap in price.
In summary, I am unsure which of the above pathways price will take. When a trader is analyzing corrective price actions there are many forces at play. These forces push, pull and tug on prices in both directions. But in all the above cases, I am expecting a retrace. Whether that retrace is small (as in Blue and Black) or deep (as in Green)...WE SHOULD BE RETRACING SOON. This retrace, and what price does afterwards will provide a huge opportunity for profits.
Let’s not get married to one pathway over another...LET’S LET PRICE PROVE Its INTENTIONS...AND THEN BE PREPARED TO PROFIT.
Best to all,
Chris
ES_F Week Recap. Is there more upside? Review: This weeks agenda was short covering, market got too short under 3930 and we used the covering do drive us higher to our bigger supply areas where we can find more selling. We have successfully arrived at our next bigger time frame supply level. Wasn't an easy week to trade as they didn't make this move up as fun for everyone but levels held nicely and targets were reached. Last few data releases were different than what we are used to and trades take longer to set up so extra patience is required. End of day today we used the short stops that we built second half of the day to unload our inventory and run it up over 4103 where we found more sellers from where we dropped the bid end of day. The way we closed at first seemed bad for the longs in a way that we have trapped inventory over 4084 and that was that, after review it makes me think that possibly we just found supply and dropped our bid to cover lower but I think there is still some more covering to do up here. Doesn't seem like we are ready to reverse just yet..
Overview: Coming week has lots of data so it wont be an easy one, best to take it day by day and let the market show us what we are doing. Sunday Globex will have to show us the next set up... our potential support is under 4084-77, our position end of day was in that area as well. Monday is no news/data day which means less volume and after todays end of day drop we might have less bullish traders in globex so they can buy it back cheaper and try to make another run at it, depends where we open but we should be over T2 range which tells us more shorts are trapped under for potential support and if we run out of supply in 4100-4084 area then we will need to get more over Fridays high which if broken will create more buying to possibly get us to test next supply area. Our support is under 4084-77, red flag if we break and start holding under 4061-56, ideally we consolidate under or above support then start pushing away from 4084 again during RTH BUT since its a big supply area they might try to consolidate then get over 4100 during Globex since there is less volume and use that as support later in the day, if that happens we might will have to watch potential support under 4100 and resistance areas stay the same. Have to be careful up here because size is doing business here and they don't care what anyone thinks as they will get their fill or do what they need to do. We are towards an edge where things like reversals happen but that takes time to play out or can be very quick.
If we did happen to finish this move higher and longs are trapped, we have to start seeing price break and hold below our lower support areas and moving away from this supply, until then they might keep moving it higher.
Levels to Watch: Resistance: 4168-4162 //4143-37 // 4123-19 // 4100 Support: 4084-77 // 4061-56 // 4030-25 // 4012-08 // 3957-53
MACD trendlines offer very good info.All possible MACD trendlines of relevance have been drawn. It is time for the longer term MACD resistance lines to affirm their dominance over the shorter term uptrend MACD support lines.
I think a sell off until mid-february and then a bounce until beggining of march seems like a likely scenario.
Cheers.
#ES_F Friday 1.27.23 Overview Review of 1.26.23: Last night Globex opened and found support on our TPOC location from Monday-Tuesday right above our 4030-25 level. We used the volume from morning data to run the stops over 4046 and get us up against our resistance before RTH Open. RTH opened with the stop run over ON High into Supply area where we found our sellers which took us down and broke morning support but inability to break 4030-25 gave us clues that we have buyers below and we can see that below us on the left that we might have trapped some shorts on yesterdays move back out. We took in all of the supply above and made another run, I assume they might have waited until the end of the day to run it because we had so much supply above, even the push over it was slow and grindy which doesn't mean its weak but to me says lots of sellers and the buyers are just the unwilling shorts getting bought in. Besides the slow and grindy action levels held very nice and targets were hit, in the morning started thinking they might have the juice to get over 84 but with them having to first flush out supply was not enough gas but we hit 77.25 almost to the tick.
Overview for 1.27.23: We will have to see how Globex will set up before PCE Tomorrow but we are now in area of supply, our bigger time frame level above is 4084-4123 which is our pocket of resistance and supply. Since we are up here and covering they might need more liquidity to get covered and with tomorrows data they might try to use that to make a run at it. Depending on how they will play it out I think we can have a very tricky day because we are currently over T2 high, over Monday high but we are within range and willing buyers might be running out, do we flush everyone lower, trap shorts and use that to head over 4084 into supply, do we build a base here get over it and head for that then flush it back down? lots of questions for tomorrow and might be a difficult day. We have our potential support under 4061-56 and 4046-42 levels if we make a run for higher supply area and fail there and start taking out those supports the flush can can be big to the downside. Letting things open and show the way might be a smart thing to do tomorrow;
Levels to Watch: Resistance : 4143-37 // 4123-4119 // 4103-4099 // 4084-77 Potential Support 4046-42 // 4030-25 // 4013-08 // 3994-89
Area to watch is 4061-56 and 4084-77 Tonight and RTH Tomorrow
IF we do happen to get a big move down, better support areas below are 3957-53 // 3944-40 Which is our T2 Low area
Weekend Update: Price still unable to provide clear directionLet me be clear. Sometimes we feel very confident about the market pattern we're trading and on other occasions we don't. For me, this would be the latter. That's why I primarily sell OTM futures options.
Today, we didn't get any definitive clues. I'm sure this choppy action is like death by a thousand cuts for traders on either side of the market. But I have to stand pat in the notion that if this was the pattern set up where the market was going to rally to 4300-4500 area, this would be a C-wave. This would also be mature enough for us to see impulsive action higher. We do not have any impulsivity whatsoever. I believe the market is trying to tell us something. Unfortunately when in the midst of both B-waves and 4th waves, a complex pattern will not reveal what it was until it's in the rearview mirror.
I will acknowledge it's both difficult and frustrating to try to trade for profit in this environment. I am still under the impression we are in an ED for our b of B. Whether that ED is limited to the end of this pattern or the entirety of this pattern (Red Trendlines is ED at the end of this pattern, where as Black trendlines represent the entirety of the pattern) I believe where in a diagonal. Nonetheless, I have Fibonacci Confluence at the 4018 area. Also based on the various micro pattern extensions I have located a PRICE PIVOT target box. It is here where price will have to decide. Break above the black pivot to the upside and we should see 4300, come into and retrace and break below the red pivot and we should see 3875-3840.
Now some could argue this diagonal is a leading diagonal. Ok, I won't argue too much against that, but my point is whether leading or ending, a retrace of a portion, or the whole pattern, is warranted. However, the pivot areas will answer that for us.
So I'm looking for a retrace to get a sense of what we're dealing with. In the meantime I'll be patient. I will advise traders do the same. Taking outright longs or shorts in such choppy action could cause losses, so please know your stops.
Best to all,
Chris
At the level of interest - ES SPX AAPL USOIL et al....SPX is in the area where I think it may reverse although higher highs to end the day is certainly possible.
It has been a hard slog for bears and according to what I'm seeing on the put/call charts, the bets are mostly bullish. This makes sense in terms of price action but under the hood there are some issues.
There are technical reasons why I'm still bearish here, and basically that's what I talk about in the video. I know some will probably criticize this as being "too bearish" and that's fair. However, I don't think I'm imagining what I'm seeing here. The RSI has been very clear when the selloffs looked too weak and I have pointed that out when I saw it. The RSI in particular is now clearly flashing a longer term warning here, which I try to explain.
Good luck and have a great weekend!
Moring Update: Are we in an ending diagonal?Last night I had a social event to attend. A lot of market talk with different opinions...some very dire, some very rosy. I'm thinking to myself the market sure has people guessing right now. I had some DM's asking about being in other patterns that suggest we're moving higher...no doubt because they've been exposed to other analysis. Me on the other hand, I don't follow anyone. I simply looks at the charts.
This pattern looks like an ending diagonal, it fits with the rules of an ending diagonal, but as I have said 100 times prior...it's the way this pattern started that has me thinking we're something complex and it's giving many people fits.
If this is not an ending as I outline above then price should be skyrocketing higher. The market has had a could opportunities to do so and has failed to push impulsively higher. Again, I do not want to get married to analysis if price proves me wrong, and I certainly do not want to loose hard earned profits...but price has a lot to prove.
Above 4090 and I'm starting to think this is something else. But many elliottitions look at the longer duration charts. I happen to believe (as Elliott said) that each smaller time frame pattern is a fractal
of the larger pattern. They're Self-Similar.
Here's a 1 minute chart below. I don't label the smaller time fractals but the overlap makes it hard for me to think we're breaking out. This is how we've traded since December.
The overlap even shows on the smallest of timeframes. Nonetheless, let's see if price can break above 4090 today to get me off this ending diagonal and get some clues as to what we're in. In the absence of that, I'm expecting in the next several days to week, for price to be heading back down into the 3800's.
Best to all,
Chris
#ES_F Thursday 1.26.23 Overview Review: Last night Globex opened and drove under 4030-25 trapping supply over which started our move overnight move. Yesterday we had signs that inventory is still low and someone is buying, Globex was used to drop the bid under Previous day low which helped get us under 94-89 and our T2 Low Support which made more people sell out into the buying under 3976-71. Once selling has stopped the inventory was short and our supply was back over 4030-25, today showed us that there is still size covering and wanting that supply. 4076-71 was look below and fail, once we got back over T2 Low and 3994-89 position was below us.
Overview: Interested to see what we will do in Globex tonight, we still have supply that is coming out from above this 4042 area and now our buyers are under 4025 and under 4012-08. If we break under 4030-25 there might be a chance to visit 4012-08 or close to it, if we wont see a full test or break under it that will show strength going into RTH but it might be a tricky day as we might be trying to get as many sellers shaken out before making another run at bigger Supply area. as long as we are holding over 4000-4012 area there is a good chance to make another attempt higher to 4046-42 // 4061-56 which would be our T2 High and maybe get close to 4084-77. Ideally we don't go there tonight first but instead come down lower and consolidate. If we do get over 4061 at whatever point that is not the best area to add because that is an area of bigger supply and things can come to an end quick. Area to be careful at.
If we do break under 4012-08 - 4000 those will be first red flags and break and hold under 95-89 would be a big warning might change things to the downside pretty quick.
Levels to Watch: 3994-89 // 4012-08 // 4035-25 // 4046-42 // 4061-56 // 408477
