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Tuesday, August 23, 2022

Surveying the damage after yesterdays sell-off, and taking a closer look at Natural Gas

 As you probably know, I've been bearish ever since the market overshot a couple weeks ago, and I encouraged folks to start aggressively shorting this market.  

See: Market Update 8/16/22 - Trading Into The Danger Zone

$INDU - the updated DOW chart shows a possible completion of wave "D" 


As you can see, the Dow took out the 200 day, moving average, and held that level for a couple days, just as it did in March, April, and even Feb. (above the 50 day...) 

Of course, the market wasn't actually taken down until after August Options Expiration, which resulted in yet another, "Monday morning surprise". This is the same thing we saw when the market crashed on delayed covid news, just after OPEX. 

I'm still getting caught up on charting, and whenever we see a coordinated move like yesterday's... there are always things that soon become quite obvious, and by yesterday evening there were already several things started line up, a few of which I tweeted out, yesterday, and many more things I didn't, and won't...  because I don't want to give away too many secrets. 

Here's what I can tell you about yesterday's sell-off 

1. This Sell-off started in Germany, and this isn't the first time we've seen this. This is where US futures manipulation usually begins. There's a lot more I could say about this trade, but I don't want to give away my trade secrets. 

2. Of course the $VIX broke out, but do you know where it was sold, yesterday?  

If you missed that obvious target, shame on you! 

3. $SQQQ  was jacked  - meaning the the bid was raised (precisely) above the 20 day moving average. DOW internet bear $WEBS confirms this.... as it was jacked precisely above the 200 day ma. 

What does this mean? What this proves is that the manipulators (the bank's hedge funds) use leveraged funds, and the $VIX, and the $DAX to totally manipulate US markets, as I've been saying all along. 

This is probably the whole reason for the creation of these leveraged instruments, in the first place!  

4. What this also proves, is that the market is engineered by the same people who control the lame stream media, and it moves according to their schedule, not yours! This helps explain why 99% of whatever is being reported, is nothing more than a distraction. 

5. It also proves, that the folks who still believe the market moves according to Elliott Wave Theory, or according to a painstakingly drawn parallel channel, are as clueless as I was, when I started predicting markets over 15 years ago! 

Does this mean I'm going delete 100's of charts that apparently no longer work, like they used to? No.

Channels still hold the key to one thing, and that's to have the ability to determine the direction. Sure, channels break all the time, but channels are also repaired, and when you see that happen, you know there are 1000 hedge funds who also see it, and put money to work accordingly, just like we saw, when the charts were repaired back in 2020, and this is especially true when moving average (buy signals are triggered). 

Also, patterns still work to some extent, and it often comes down to correctly identifying a pattern. 

As many views that I see on twitter, not one trader correctly identified the pattern, you see on the Dow chart above - a down-turned megaphone or expanding triangle pattern.  

My short term forecast - from yesterday - doesn't change.  

All eyes are on Jackson Hole this Friday, and inflation isn't even an issue. 

Don't be surprised if we see the retail short-sellers squeezed, when the Fed comes out dovish 

One more thing 

Investors continue to hide out in Utilities, and Natural Gas prices remain elevated, in order to prop that safety trade up, but that trade is already way overcrowded, and I believe we're looking at a double dip. 

Utilities - the engineered safety trade complete with predictions of a, "super cycle in commodities".  

Sadly there's only a leveraged 3X bull Utility ETF, and I don't recommend shorting these funds. 

There is an 2X bear, the $SDP, but I would just be a observer after the big move we saw yesterday. 

Also, we don't know how the 2X Utilities ETF is going to perform. 

Natural Gas

Another place retail investors are hiding is in Natural Gas, and the lame stream media continues to push stories about maintenance. Yes, routine maintenance! 


European gas prices surge as Russian pipeline maintenance fuels fears of a total shutdown CNBC

 As far as the Natural Gas chart

Trend remains higher, but in the short term I think we could see a back-test of the lower end of the rising megaphone pattern   

There's even the possibility that the top is already in, since megaphone patterns don't even have to complete. In that case we could easily see Natural gas cut in half, before winter sets in.  

This is currently my favorite trade, because of how crowded it is, and the news saturation, and because we've already seen other commodities crash, and with the election in only 3 months, the deep state needs to bring the cost of heating your home, way down! Of course this will also help put the Fed on hold, because the only thing causing inflation is the continued speculation in energy, and commodities.  

However, anything can happen, including an immediate retest of the top of the pattern, which I can't get an accurate handle on, until it happens. Looks like maybe as high as $12?  

I think Natural Gas needs to consolidate, before making a final push, in 2023, but we shall see.... 

Good Luck, AA 

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