Wednesday, January 15, 2020

Market Update 1/15/2020 - Dow 29,000, Overshoots, & Advanced Charting Techniques

I just can never find the time to blog, but there must be a reason I was up at 3:30AM this morning,

I looks like the goal, of the psychopaths who control this market, is to close above DOW 29,000, this OPEX Friday. They only care about taking out the next psychological target, and 29k is a good one. It sounds better than 30, and this is why you see so many goods priced at 29.95. 

These round number targets is all the PTB have, since they don't know how to find a technical target, and I've been thinking; this is why the price action commonly overshoots to the upside, and the down side, and more importantly; this is the reason markets take the stairs up, and the elevator down. 

The bulls set a bullish target regardless of technical support/resistance, and it's only later that the technical start working again. This happens all the time; markets break out, and hold up for a while, only to break technical support, or fall back into the bearish channel, a few weeks later. False breakouts, or overshoots, are a dime a dozen. 

These false breakouts is what makes calling tops so difficult, and this top looks like it could be a major one. If it's the top on a 12 year bull market, I can say this will be a first for me, since I only started charting around the time the great bear market commenced in 2007. Perhaps this is why I find calling bottoms easier, although bottoms are easier to confirm. Market tops tend to roll over slowly, as the bulls continue buying every dip, and most short sellers get squeezed, during the first big counter-trend rally.

 I tried calling the top on this market over a month ago, but it soon became clear that the $VIX was going to continue to be hammered down, and more importantly the bullish trend remained intact, and a reversal can't be confirmed until the $VIX breaks out, and key support starts breaking down, or a new trend can be established, the last of which can take an awful long time.

Theoretically you'd be better off selling when support breaks, than trying to pick tops, but these reversals often occur overnight, and chasing weakness isn't easy to do, and we've already see a couple recent bear traps, but I still prefer selling into strength.    

This comes down to finding good entry points, and it's easy to miss the boat waiting for the bounce (in a bearish reversal), or pullback (in a bull run), that never comes. This comes down to the trading part of it, and I think this is far more difficult than charting.

Touching on the previous blog: This all has to do with the pump 'n' dump. The bulls and bears probably coordinate the pump n' dump, or they are all one in the same, just as the left/ right paradigm in politics makes people believe that the Democrats and Republicans can't work together, as they continue to pass trillion dollar spending bills. The Market Makers may say, "look we're going to drive the Dow to 30k, before May, and then she's all yours, and then they all put their sell orders in, and go on vacation. 
See:  The Left Right Paradigm Is Over: It's You Versus The Corporations businessinsider.com 

Overshoots & Stophunts: 


Once the market overshoots, the algos are loaded at the breakout point (stophunt), and then when that support breaks, program selling takes over. This explains why the market takes the stairs up, and the elevator down, and this is why I spend so much time looking for stop-hunts. This also explains why buyers no longer step in and buy support, on the way down. Back in the day, you used to see buyers step in at support, but nowadays, market selloffs tend to continue in a straight line, with very weak, or non existent, counter-trend rally's. 

Let's use Tech as an example, since this is the most overbought sector of all. Just yesterday it was reported that the UK is more heavily invested in US tech companies, than US investors. This is something we already knew, looking at the $NDAQ index. See: Nasdaq's Nordic Debt Market Continues To Grow globalnewswire.com

These Nordic socialist countries are all chasing yield in order to sustain their failing pension ponzi scheme; a topic for another day, perhaps.

$NDAQ - overshoots the 2018 high by around 5%, which is probably the gains they're looking for. A self fulfilling prophesy, of sorts. Bullish channel in black remains broken. I've lowered the stophunt to just below the 200 week moving average, and we'll no doubt see bounce at that level, but I'm not seeing a bull market here, only a suckers rally, created by more bad Fed policy. A liquidity bubble.   



Getting back to more obvious overshoots. 

$NDX Using the 2 year $NDX chart as an example - Looks like the price action overshot both parallel upper channel lines. Tech has been leading for years, so let's say the bullish target was 9000, and momentum has carried it slightly higher, or maybe we're waiting for DOW 29k? The top of the channel becomes the stop-hunt just above the 8700 level. That would be a 200 point overshoot, and that's probably enough to shake most retail short sellers, but what will happen when the price action falls back into the channel, is very predictable. 


$NDX - looking at another set of parallel trend lines, the target looks like 9175 - 9200, depending on how how long it takes.... Support at my pink line becomes the stop hunt, or the upper blue line, if this happens to overshoot, which I doubt. 
    
$DJUSTC - This the DOW Tech index, and you can see where it slightly overshot the 2500 level 
Again, not a bull market, but a massive head fake rally, caused by the desperate central bankers.

$SPX - Some Elliotticians believe this is a bullish wave 3, so I've labelled it as such. If they're right then we should only consolidation in wave 4, over the next few months.
looks like a little overshoot above my red line, and we saw yesterday's rally sold. I think this could retest, or even overshoot... and then this 3280 level becomes the stophunt. We'll have to see how the market reacts to signing of Trump's historic China Trade Deal.  

$SOX probably looks the worst, with the $SOXL taking out yesterday's upside target. The Hedge funds have been using these leveraged fund to manipulate stocks higher, since James Cramer was seen complaining about the bears using these funds to crash the market, back in 2008. Didn't take long for the bulls to turn the tables....

$SOXX - the ETF looks like it's overshot the upper channel again. It's technically a higher high, but
not a bullish breakout. 

It's possible the price action could hold above the top of the channel for a while, but I don't see this as a bullish wave 3.

You'll find a link to my public charts area at stockcharts.com, in the left hand menu, the legend (to the charts) tab, at the top of this page. 

Should be an interesting next few weeks, and trading in 2020.

Good luck, AA 


  



Thursday, January 9, 2020

Market Update 1/9/2020 - Is This The Big Pump and Dump Ahead of Earnings Season?

Trading has been pretty wild over the past couple days, with gold, and oil spiking, ahead of the World War 3 trade, that wasn't. It's nice to get back to normal trading, on decent volume, and nail every market move over the past 2 days. I even warned people not to chase the action into the close, and that turned out to be good advice.

Sadly, unless you trade futures contracts, you missed an easy 100 handles on an overnight swing trade.

Tuesday night we saw market futures gap down 50 SPX points to some very obvious support levels (pointed to in previous updates;DOW 28200; SPX 3200), followed by dip buyers coming in at support, and futures recovering by the next morning, and by the end of the day the NASDAQ and the $SPX, has taken out new all time highs!  It wasn't until the end of the day, that we finally saw a little run for the exits, on reports that the Iranian backed militia had once again fired a couple missiles into the so called green zone, near the US embassy. This is nothing new, by the way, see:
"Since September 2018, IBG militants have fired over 30 rockets at U.S. facilities in Iraq, including the U.S. embassy in Baghdad..." csis.org 

It's only now that this escalation, on Iran's part, is being reported, and Trump blamed.... of course. 

Tuesday nights trade reminds me of the night Trump won, and the main stream media was pushing the market collapse story, as DOW futures crashed over 1000 points, and predictably the short sellers were crushed the very next morning. It was probably one of the worst head-fakes I've ever seen, second only to the rebound off the 2008 lows.

So, now that the short sellers are trapped again, and earnings season doesn't start for another week, I think this short squeeze can continue.

Last earning season was "not as bad as expected", and I suspect this one is going to be "in line with expectations", or even "better than expected". That presents the perfect pump 'n' dump scenario. Short capitulation, followed by profit taking, on good news.

$SPX - Short term: This morning I didn't have any trouble finding a bullish channel on the 1 min chart, and this morning I'll be replacing the 15 min chart with this one.

$SPX - 1 min. Looks like a pullback in wave "a". Futures are up, but I'd expect another pullback ahead of the weekend. Could even see another Short Squeeze Friday, if we can complete consolidation, by the end of the day.




$SPX 10 min view. Res is the black line, and that's where futures are pointing. This the chart you'll find in the public charts area.


$NDX  - Of course tech has to lead. Found this 9450 (Feb) target, on a 3 year chart view. 


DOW - I wanted to nail down the same target on the dow, and you can see where it's having trouble breaking out above res. I had to go to a 4 year chart to find this channel.


Watch the public charts, and the $VIX alerts, and if I'm helping you trade, then you can help me keep the charts coming, by making a donation to this website.
I don't have time to cover Oil, or Gold, but you'll find those chart in the public charts area.
Opening bell opens in 5 min, and I still have some chart updates to do.
Good luck, 
AA



 



Tuesday, January 7, 2020

Market Update January 7th, 2020

Hope you all had a good holiday! 

It's been more than a week since my last update, but holiday trading was slow, and not too predictable going into the New Year. So much for Santa Claus rally theory.

It was a good thing I replaced the 1 min. chart, with the 10 min view, before the very short term charts broke. 

I've been pretty busy in the mornings trying to make sense of this market, and trying to get a handle on commodities, currencies, and tracking foreign markets, and that just doesn't leave much time to blog.   

I continue to provide updates from my Twitter feed @3XTraders, so follow me there, if you can handle my politics. I have folks following me there, who have opposite political views, and I try not to let that distract me from the business side. Just don't pester me there, or I'm liable to block you in a New York Minute. See my friendly warning in the the public charts Legend, linked to - in the tab above - on this page.       

Technical Issues

Third reason I'm not blogging as much is that my computer has been acting up, not wanting to start up in the morning. No boot up, after powering up, black screens, etc. Yesterday she froze up a minute after start up, and it took 15 minutes to change some bios settings, and run windows startup repair program. This is a bad sign of things to come. This morning she fired right up, but the video flashes from one monitor to another, and this points to an ongoing hardware issue. I'm probably going to have to do a hardware upgrade at some point, and planning to back up my files today.

In the mean time: if I experience a major hardware failure, I'll tweet out an alert from my mobile.

I got distracted this morning, and almost already out of time.

$DAX bounced off support yesterday, so we seem to be getting back to normal trading. The US market has been trying to lead, and that just hasn't worked out too well. Next I'm going to be looking to see if the $DAX can take out the 2018 high. That could take at least a week, so I'm not seeing an imminent global sell-off. 

The 10 min chart isn't working too well. Looks like it might be trading into a down-turned triangle, pointing at the 3200 level, but you're better off watching the DCS charts. 3200 looks like the stophunt, so if that level breaks we could see a big move to the downside.

$SPX DCS chart: Stophunt is 3200, at my purple line

Maybe the market continues to hold up in the short term, but I'm seeing a 10% pullback target before March.

If the market continues to melt higher, then DOW 30,000 is an obvious psychological target. And from there, a pullback to 25500.



Don't miss the next blog, and watch for a $VIX breakout above the 16 level.

In the meantime see: Well-intentioned plans can bring unintended consequences. The world’s major central banks have been adding stimulus to the global financial system, hoping to lessen economic volatility" etftrends.com 

And now you know, who's manipulating "volatility" 
AA