Yesterday, we complained about the lack of a pattern in the Eur/USD 15 min chart (see LINK here). Today, the market made two patterns of note. The first one was this exquisite contracting diagonal which worked in every detail and was called in real time (as fast as I could chart, lol).
 |
| SP500 Cash Index - 5 Min - Diagonal Lower |
At the point of two bars after (v), we said it would be "ideal" if the diagonal ended here. And it sure did. In the last half-hour, the market makers or those algorithms I was discussing all decided to 'pour-on-the-gas' and again try chase anyone short out of the market. Again, look at the exceptionally small pull-backs along the way to that typically 'deep' 78% retrace (or possibly more on Monday). So, we know, for sure, the diagonal is there. And while we suspect it is 'leading', we don't know for sure if it is leading or ending. All we can do - like you - is see if the pattern takes out the lows or the highs first. If the pattern is leading we think it just might be the 'a' wave of an a-b-c zigzag to make a fourth wave in a larger diagonal shown in the comments day (here at this second LINK2), which was another pattern we posted.
The third pattern of interest we spotted was in the Russell 2000 futures on the half-hourly chart, below.
 |
| Russell 2000 Futures - 30 Min - Wedges |
Here you see the breakdown of two wedge patterns. We also noted at the time, that the down wave was much longer than the middle wave in the sequence, and also longer than any of the retrace waves higher up in the pattern. That only leaves the down wave on the 16th in this particular series to exceed lower. Like the S&P cash index, the Russell was aggressively bought into the close, and it is continuing into the after-hours.
Well, at least today was an interesting Friday. Over the weekend we may get news of stimulus, government funding, and/or Brexit.
Have a good start to your evening and to your weekend.
TraderJoe
After the cash close this was announced...
ReplyDelete(CNBC)
Fed to allow big banks to resume share buybacks, with limitations
Uh, huh.. couldn't announce it on 'FED Wednesday', right, with everyone watching in real time? Nope, waited to try to slide it in to a Friday night where 'no one will notice'. Complete and total subterfuge.
TJ
Wolf Richter did a recent note on the buybacks and the absence of bank participation. Maybe they're already fully "financially engineered" with zero cost money from the Fed or they perceive it as a herd thinning "trap" that will thin their ranks.
Deletehttps://wolfstreet.com/2020/12/17/share-buybacks-drop-42-in-q3-yoy-to-102-billion-big-tech-buffett-dominate-big-banks-are-gone-very-top-heavy-affair/
Lol! Sure looks like the buy-backs started just before Friday's close. While the explanation is great confirmation, we knew this all along just from watching the price action. They are slippery as eels! I would not be at all surprised to sky-high futures and the anticipated 3800 upside target quuckly met as this blatantly engineered "Santa Rally" gets underway. For a moment yesterday I was starting to doubt my round number thesis, but these guys truly are predictable!
DeleteSome observations on 4hr futures, daily/weekly cash. I believe clicking on the pic will enlarge it for better viewing. Short week next week will undoubtedly make things interesting.
ReplyDeletehttps://funkyimg.com/i/39t7z.png
Again, good work, Gw. Keep it up!
DeleteRSI does all the work. I just carry the messages best I can. :o)
DeleteNice work GW. So you say a HD followed by a RD is the best set up?
DeleteJoe, I'm having a little trouble with your count. On every time frame which I look at today's action I come up with a three wave abc down where your 3-4-5 make and ending diagonal c wave. In addition your wave c of (ii) is larger than all of (iv). Isn't that a degree violation?
ReplyDeleteNo, once again you are counting 'backwards in time'. Wave (ii) was made first. Wave (iv) can have any relationship to it (same degree or one larger degree).
DeleteTJ - can you give your opinion of this long term chart and if you see degree violations, thank you. Here’s the link. http://www.pretzelcharts.com/
ReplyDeleteYes, I have commented on such charts numerous times before. (iii) of 3 is larger than all of 1.
Deleteyes, and responded so - above.
ReplyDeleteThe market appears well aware of this trend line .. backtested and rejected multiple times (I count 7) on the hourly chart.
ReplyDeletehttps://www.tradingview.com/x/FoTnNXTd/
Nice view .. thx!
DeleteThank you for your responses and knowledge
ReplyDeleteA couple of Weekly ratios I found interesting if interested (SPX/Crude)&(SPX/Lumber)-
ReplyDeletehttps://funkyimg.com/i/39tQ8.png
Note: on Crude, did not use current front month, but next month out to avoid the negative pricing.
DeleteI find the SPX Stocks above their 50 ma to be quite helpful - observations vs index
ReplyDeletehttps://funkyimg.com/i/39u3f.png
THANK YOU GW - Much food for thought. Next week:
Delete(1) MOAR Stimulus, with the hope of moar and moar to come... pass the hopium!
(2) TSLA, added to 80% (PLUS) party and we find out if the front runners acquired too many/few shares before the ETF's buy on Monday's close. Research Affiliates has a very good analysis:
https://www.researchaffiliates.com/en_us/publications/articles/819-tesla-the-largest-cap-stock-ever.html
Longer Term, the EV "movement" will likely need higher Oil and Nat Gas prices for added support.
👍
Delete