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Wednesday, August 24, 2022

Market Update 8/24/22 - Taking a Second Look at The Head-fake Rally in Energy

 Yesterday's trade was quite boring, which is exactly what you would expect during the Summer, but we did see Energy up another 4%. Yes, 4%, but judging by the 0 likes on the tweet below, traders are apparently more focused on $AMC, and $APE?! 

 Investor Intelligence hits new recent lows 

I told the trading apes to take profits in $AMC last week, but these idiots never listen. 

Speaking of idiots, and to help you understand the Energy chart, I'm about to reveal...  

Taking a Second Look at The Head-fake Rally in Energy  

Remember how Energy stocks held up for nearly 4 months, before crashing back to earth, back in the early spring? You should... because I remained bearish energy during that whole time period, even as Energy retested the highs. 

Firstly: What is a running wave B? 

Before I reveal the energy chart, I want you to think back to just before the covid crash, where the market was obviously trading in a head-fake wave "B", before crashing into wave C.  

 $XLC - using this random chart as an example of the running wave B we saw back just before the wave C (covid) correction/panic. It's called a running wave b, because wave b runs past the beginning of wave a. See the annotations. 

I can show the same thing using one of the major indexes, without giving away any future targets.  

$INDU - another example of that running wave B (head-fake rally), we saw in early 2020. 2. Again, that running wave B isn't support; regardless of where this index was bought, a few weeks ago.  

 Yes, I saw this head-fake wave B, back in early 2020, before anyone have even heard of covid, and even though I was uncertain of what was coming, I was already hoarding toilet paper, because when the STHF you can never have too much toilet paper! I knew something bad was coming, but as it turned out, it was not nearly as bad, as was being reported... and only now, 2 years later, are folks finally waking up to the fact that Covid as it turns out, was nothing more than a genetically engineered Psyop. 

Getting back to the top in Energy, and the crash, and the pattern - previously - unrecognizable 

The head-fake rally of 20-19 -2020, was an excruciating thing to watch, especially when the idiots at CNBC were celebrating "all time highs", and counting daily winning streaks, instead of reporting the truth, about the real state of the global economy. This is about as dumb as it gets, but this is what the cable networks were pushing.  They even reported that transports had broken out to new highs, a total lie, on a leading indicator. Google search: "Dow Theory Transports"; if you're unfamiliar... 

$TRAN - early 2020 - $TRAN as it turns out, was obviously NOT leading markets higher, but that didn't stop CNBC from lying about it. 

I recognized this all the way back in the spring of 2019! 

Much more to be learned from the above chart

 2. It's also a good example of a broken channel, followed by a repaired channel, which I touched on yesterday, if memory serves.  

3. It's a great example of the pump 'n' dump market rally we saw last year. Fools rushed in, and fools rush out. 

4. See where this index was sold, last week - at the 200 week moving average. 

5. I already mentioned that the 2019 high isn't a support level, but it bears repeating! 

Anybody who is familiar with Elliott Wave Theory should immediately recognize how ridiculous the 2020 rally to nowhere was, but I digress 

A Look back at the top in Oil and Gas drillers, and the June crash 

 $OIH - revised EW count shows a rare reverse symmetrical triangle pattern. A- B (head-fake), C, D (headfake), E (crash). This pattern is so rare, that you won't find much written about it in the EW literature.  

When Energy topped out in June, I figured it was trading into a topping pattern - a broadening top - but as it turns out, it was far more bearish, and now you see energy trading into another wave b. A tiny running wave b, of B. 

Knowing this market as I do, energy will probably continue to hold up for another few days, mainly because the sellers are still on vacation, but I think we can expect a little mini-crash in a powerful wave c, as soon as Friday. From there it looks like energy will continue to trade in a range, before the next big crash, which may not come until 2023. 

As far as the broader market 

It seems a little early to be getting bullish, after Monday's surprise, but already, yesterday morning, I saw Jim Cramer pumping the Nancy Pelosi trade (semiconductors).  

It does seem like a wave 3 crash is ruled out, but I think we won't know for sure for a few more days.

Don't ignore a rigged $VIX breakout, like the one we saw on Monday. That should have come on OPEX Friday, when Crypto was seen crashing, but the market makers didn't want that. Now, I'm supposed to get bullish again? I'll sit on my hands, rather than chase more low volume, stupidity. 

I see all kinds of trades in other markets, but nothing I'd be willing to hang my hat on   

As far as Jackson Hole, I think the fed blinks, knowing that inflation has cooled, no thanks to them. 

All the fed has done for the past year is use every excuse in the book, not to raise rates, so calling for them to go full metal Paul Volker, is beyond dumb. The fed only cares about defending the $USD, in a time of war, and preventing Donald Trump from being right about a coming great depression. 

It's deflation they fear, not inflation. 

Donald Trump Warns U.S. Economy Could Reach Levels of Great Depression

Expect the Fed to come out of Jackson Hole Dovish, and to taper the taper, in Sept, cutting the lending rate by only a half point (if that), and that only in order to save face. 

Jackson Hole and The Ghost of Paul Volcker

This market is not the market of the 1970's, and if they were to raise interest rates like they did back then, they know damn well what would happen. 

Take Care, AA 



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