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Saturday, September 28, 2019

Market Update - Friday's Downside Surprise, Another "Bear Trap?" - Week Ending 9/28/2019

 Friday's Downside Surprise wasn't that big of a surprise, with the S&P closing down only half a percent. DOW only closed down .25%. It was a nothing burger, with the $SPX closing above the 50 day moving average.

Another reason  Friday's Downside Surprise wasn't that big of a surprise is that I spotted this alternate pattern (the parallel channel in Purple), and the wave "B" target on Thursday, and I alerted to that, going into Thursday's close, with the annotation "Set The Bear Trap?". Looks like I was a day late and a dollar short on that call, but you can see where it rallied off the lower end of the range. I'm not sure this is a wave B, or just a retest of the 50 day ma, at support. As I've said before Elliott Wave Theory doesn't work so well on a 1 min chart. There's no magic bullet.

What was a surprise, was to see the market sell-off on a Friday, with the $VIX conveniently driven just above the 17.50 level. I kept watching for selling to accelerate, which it never did, so I never did put a down-arrow on it. It's just not smart to sell on a Friday, unless it's on short capitulation. 

The lack of selling momentum

Looking at the 1 min chart above: Compare the downside momentum of the previous decline (on the 24th), to Fridays sell-off.  Even after the $VIX broke out, we didn't see any panic-selling. In fact, I believe the market closed higher than where it was when the $VIX briefly popped above resistance.  "The selling is a little too controlled", as I stated in one of last weeks update. 

Reminds me of when they repeatedly drove the $VIX just above 20 - back in late August - before finally squeezing the short sellers into Labor Day. $VIX 20+ is a universally recognized bearish signal, for many traders, but I trust trends, and patterns, more than arbitrary numbers.

There's a lot more to reading the $VIX than just selling a breakout target, although I'm sure some weak hands got shaken out on Friday, and that's the whole point....  and before the end of the day, the $VIX had closed back down below my red line, signalling the "all-clear".

$SPX - 60 min chart. Support (circled) holds, trend remains up. $VIX remains contained. 

Looking at Monday's trade: 


It all comes down to the $VIX, and as I pointed out last week; in the past 10 years, we've "NEVER seen the $VIX close at the highs for the month". 

1. If the $VIX were to continue to breakout, then we could see selling accelerate to the down-side, buy that seems highly unlikely. Low $VIX = #NoFear

2. If we see a retest of the lower channel (in purple) on the above chart, on a lower $VIX, that's bullish.  A retest of the lows on a lower $VIX is always bullish.


I told you we were going to watch Oil consolidate, for a week or 3, so let's get to it.

$USO - We saw oil traders shaken out below the 50 day ma average on Friday. Coincidence? No.
We also saw what looks like another "gap fill". I didn't annotate it, but if you look closely, you'll see it. The $OVX also ended down, which is also bullish.  Looks like it's time to start pulling the trigger, and I'll be adding this chart to the Public Charts area

 $Silver - seeing acceleration to the downside, and that confirms a powerful wave 3 (or C)

Longer term outlook:

I've gone back and forth a few times on the longer term pattern. I went from bullish to bearish, and now leaning towards bullish again, because all this market seems to do is hold up on a manipulated $VIX.  All it would take to drive the Dow to all time highs, is for money to come out of the safe places, like global utilities, consumer staples, precious metals,  the bond market, and even Bitcoin, and we're already seeing some of that.

$DJIA - The DOW held support at the 26,800 level, and I believe Wall Street isn't worried about anything, except squeezing the short sellers, into the next Options Expiration, and the Thanksgiving holiday, and the next psychological target - 28K - still lines up perfectly on this chart. 

 Just as the $VIX is rigged, so was the breakout in early Sept and you can see exactly why... looking at the next DOW chart. Now it consolidates in a range.

BUT just because I can find a bullish pattern, don't think I'm bullish on a rigged market!

There are red flags which can't be ignored!

$WLSH  - Remains over-bought (above my blue line), and most recently saw the highest weekly selling volume in 20 years, and now we see the real market trading at a lower high.

 I can remain bullish - short term, and intermediate term, and follow the trend, and play along for a little while longer, as long as the trend remains intact, but the collapse is coming. Maybe not until after Brexit, or even next year, but you can only build a house of cards so high. 

$SPX - rallies above 2954 support - the May high. We could be off to the races right here.  

Talking News & Politics

The real mobsters aren't in the White House, they run Wall Street, and the bought and paid for politicians, who manage the DC sewer - "swamp" is too nice a term.... 

Remember me saying, "I can't wait to see what bs story the (corporate owned) financial fake news uses to scare investors this time"? Well, now you're seeing it, and Trump collusion 2.0 was perfectly timed, in order to draw attention away from his good work, at the UN.

This whole thing was coordinated months ago, before they changed the rules on whistle blowers, and they were just waiting for the right time to drop this bogus, "Impeachment inquiry". See: Intelligence community changed whistleblower rules to include hearsay shortly before complaint was filed - Business & Politics Sept. 28, 2019

It's hilarious to see Crooked Hillary pointing here finger at Trump. "The lady doth protest too much, methinks"! At least Obama is smart enough to keep his mouth shut, especially when it comes to supporting China-Joe Biden. See: The troubling reason why Biden is so soft on China - New York Post, May 11th, 2019  

Trump collusion 2.0 is also a good distraction from what the international banksters - JPMorgan Chase & Co., Citigroup, Goldman Sachs, Morgan Stanley - all the usual suspects -  were doing at the Ritz-Carlton in Beijing, on Friday, working to undermine the American people. These are the real traitors!  See: Trade War Hasn’t Stopped Wall Street’s $9 Billion China Rush. Bloomberg

Our country has become so corrupt there is no draining the swamp. It's just going to have to implode under it's own weight, and I think we won't have to wait much longer. 


I spent several hours on a Saturday, creating this blog, and another 2 hours -finishing it up - this morning (Monday). It's extensive, and probably a little confusing for most traders, but this market is a hard thing to wrap your head around.

I'm still in the middle of several other projects, so I have to analyze markets when I have the time.

I'll be charting the action in real time this morning, but my schedule is subject to change. 
 Take Care, 


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