This morning I'm getting an early start, and busy updating the charts, after yesterday's little shakeout.
It was unusual to see the market whipsaw in the middle of the day, but I did alert to the market weakness at the open, as well as the ridiculous 3% rally on the $SOX, which traded into an upturned triangle patter, before giving it all back.
$SOX - (the chart below was added to the public charts area after yesterday's open).
See the upturned triangle in purple. that was obviously sold yesterday. I also found a bearish H&S pattern - this morning - and you can see where the right shoulder was sold. There's a lot going on, on this chart; too many things to mention, and although I could explain how to trade this pattern, I just don't have time to teach folks how to trade. This is something you need to learn on your own, and eventually it has to become second nature. For example: If you don't know what to do, when the neckline on a bearish H&S pattern breaks, then you have some homework to do. \
One interesting thing on this chart - that you may not have noticed - is the grey price line, showing how much more the $SPX has sold off, when compared to the $SOX, and as I've been saying for years, until the $SOX crashes, you won't see anything close to a real market crash. This was the key to not getting overly bearish in '08, and even most recently during the so called "Covid crash", which was only used as an excuse to print more money, but I digress.
$INDU - The DOW - Looks like the dow did not want to trade as I has imagined, yet the pattern remains intact.
Note: This is the wave "4" count, I was referring to the other day. And I should really move this short term chart to the 1st page, in the public charts area.
This is great, because it shows how a chart can change...! Now. I'm seeing a right shoulder target, of 35.1, and if you remember, that was the previous breakout point, back in Oct. 2. Seeing a larger right shoulder target @ 35.6, which coincides with a perfect FIB retracement! Yeah, I still get excited over chart patterns lol
One longer term outlook
One longer term outlook, it that we trade into the right shoulder, and see a much stronger pullback into the lower end of the larger broadening pattern, and that might look something like this.
Same chart - updated -
As you can see these broadening top patterns can be difficult to predict, and even more difficult to trade, and if you don't know advanced Elliott wave theory, you'll be lost.... 1. Because the waves count A-B-1, A-B-2, etc. 2. Because Wave 4 is allowed to overshoot the wave 2 pullback area, and that usually rules out wave 4, according to EW rules, and guidelines.
Now here's something mind blowing!
I've been pointing to this upturned megaphone pattern - on the major indices - for a while now, and you'll find the same thing on the BRENT crude chart, I tweeted out yesterday!
Think I may have to raise my target on #BRENT crude #Oil. These broadening top patterns are pretty reliable pic.twitter.com/rXkVvPmQeo
— Veteran Market Timer (@3Xtraders) December 1, 2021
Looks back at Yesterday's trade
My takeaway from yesterday's action is that the algos were pre-programmed to sell the omicron news, or was it in anticipation of Joe Biden's comments, and more possible lock-downs? Anyhow, we saw the market retest the recent lows, as well as a little breakout on the $VIX, and this is highly unusual heading into the beginning of a new month, because the $VIX usually doesn't make a new high at the end of any month, only to go higher, at the start of the next month. Pull up a monthly view of the $VIX and you'll see what I'm talking about!
Speaking of the monthly $VIX - the line in the sand becomes $VIX 30 after yesterday's little overshoot
$VIX - monthly view -
I'm seeing this news this morning: Biden to Announce New Virus Plan as Omicron Reaches U.S. (nytimes)
yet futures are up 300 points again, after taking out our Dow target yesterday. This is bullish technical signal, if the DOW gaps back above the 200 day, regardless of any news.
NatGas - saw another little shakeout yesterday, but not nearly as bad as I had feared, as been known to happen when the price action falls out of the bottom of a down-turned triangle pattern, but I've since updated the pattern to a channel, or a bull flag, and yesterday, we saw a bullish hammer painted on the chart. You can find that chart in my twitter feed, and I'll probably be tweeting out natgas updates again today.
The NatGas futures are an interesting read. Shows a right shoulder (on a bearish H&S pattern) sold, followed by a neckline sold. This is where the short sellers are supposed to take profits.
So, 2 very different charts, and broken support... but like I said, this is where the pro shorts typically take profits.
$GLD Gold
Looking for a gap fill - at least - and this is going to help lift commodities, along with Oil.
And of course I still love China, and Biotech, and anything else, that's been beaten up.
Looking at the calendar:
1. Weekly OPEX tomorrow - I think as bearish as most traders are at this point, the bears cannot win on their over-priced Put options. Also, who in their right mind would want to go short into a weekend.
2. Money gets put to work next week. See #1
3. Monthly OPEX is coming fast, and you can bet the smart money has already been loading up on Calls.
4. Hanukkah comes early this year, and that means plenty of short covering, ahead of Dec. 18th.
5. Volatility is bound to come way down as we trade into another holiday, and the $VIX chart agrees.
6. The Fed is all talk and no action
7. There is no scientific evidence that the new Covid variant is anything but mild. It's another case of mass media induced mass hysteria.
Take Care, AA
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