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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 

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

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, 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 


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