After counting five waves up to what we think and thought was an (a) wave up, it was likely - based on that and timing studies shown yesterday - that today could be a turn day. Turn-around Tuesday as they call it. The overnight waves were a little intractable, but when cash made a low around mid-day we think we got a handle on it, as per the SPY 15-minute chart below.
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| SPY Cash - 15 Minute - "Looks like" Five Down |
After the 'five-down' price took off to the upside in a nice 62% retracement - so far. It could go farther and take a bit longer if it wants. Still the inevitable happened - just as people were trolling the usefulness of wave counts again.
And, as per the hourly ES chart, below, so far we have gotten only a 23.6% retrace - which seems very substandard and very short in time.
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| ES Futures - Hourly - Trend Line Break |
So, "B" waves of any degree are extremely difficult to count. And while SPY sure "looks like" and "can be" counted like a five - there is some plausibility looking at the futures in particular that the down move is only a "three" and not a "five". Therefore, when counting "B" waves we have to be ready for almost any corrective sequence from a zigzag or multiple zigzag, to a flat, to a combination, to a triangle. And while 23.6% seems small, we recently counted down a zigzag in the form a-b-c where 'a' was a diagonal and 'b' was only a 5% wave! And we know it had to be a three because price exceeded it higher.
Therefore, all we can say is that from here to the high is risk, and from here to the low is risk. The only way we will know for certain whether further movement lower might occur is if the low is actually broken, and even then if only three waves lower are made, then a flat overall could result - or a triangle. And the only way we know about further movement higher is if the high is broken.
Price is still over the 18-day SMA, so the price bias is still up. There are two days now that can count toward the ES futures possibly embedding. And, most importantly, tomorrow is FED day.
So, have an excellent start to the evening.
TraderJoe
spxcfd (5min) - observations
ReplyDeletehttps://www.mediafire.com/view/6mivilhvnkiw0du/spx5min.PNG/file
Overlapalooza. :o)
DeleteDXY (mthly) - Rally in the making ?
ReplyDeletehttps://www.mediafire.com/view/w2ul1ynknkbpzs1/dxym.PNG/file
For reference - Out of 20 stocks in DJT, only 3 are above their 50 ma.
ReplyDeleteSPX/VIX (2 day) - update
ReplyDeletehttps://www.mediafire.com/view/403j0k7fmol14l7/spxvix2day.PNG/file
NYSE New Highs - New Lows (wkly) - [if interested] -
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Don't know about year end but I doubt we have an interim top. Amazing to me how often we witness the exact same patterns unfolding yet there can be so much confusion and uncertainty, BY SOME, regarding the immediate trend!
ReplyDeleteBTW, NOT trading advice per T.J's rules. I remain staunchly market neutral at this juncture pending a decisive directional break. We have what appears imho to be market price consolidation.
ReplyDeleteGood morning all. Comments are back on moderation.
ReplyDeleteThank you. Your blog got infested the past 3 days with Phil the troll. Would be better if you didn't allow any comments at all than have him pollute everything.
DeleteTrend channels on the NAS futures. No big trend change. At the top of the upwards trend channel with RSI divergence, IMO probability is back to lower trend channel soon which is around 14k right now. Very simple stuff, but it tends to work.
ReplyDeletehttps://imgur.com/WMoEOiH
spxcfd (30min) - Quick peek
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Here's how things are starting out this morning.
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TJ
Fed day - if Powell sees his shadow - 8 more years of QE 👍
ReplyDeleteWatch this relatively short 15-minute video and educate yourself on how the banks are effectively neutralizing QE.
Deletehttps://www.youtube.com/watch?v=qEgpPJgaJng
TJ
Yup, Wizard of Oz stuff with the Fed. Look behind the curtain, watch the Repo/Reverse Repo at FRED. QE is a longer term tool, reverse repo is relatively fast.
DeleteTreasuries have been directly correlated to the reverse repo. They bottomed on the exact date at the end of March that the reverse repo started.
Deletehttps://fred.stlouisfed.org/series/RRPONTSYD
Treasuries are a lot riskier than reverse repo as a short term store of cash. Forcing them into treasuries keeps cash flowing in the market, but also puts banks into the role of bond speculator / trader. So yes banks probably dumped / stopped buying treasuries and jumped at the reverse repo, which would in turn drive treasury prices down and yield up for a time.
DeleteReverse repo is the hand behind the curtain that most people don't see. QE is front and center. QE will probably go on a long time, politics and public perception, but those repos.. they can get a lot bigger, real fast.
QE just creates bank reserves, it does not changes business and bank confidence to lend money to create more credit.
Delete@Varun That first part is an absolutely untrue statement at many degrees of fail, and the 2nd part is only partially true.
DeleteIf I have a guaranteed buyer for my MBS bundle... I can sell my treasuries to the Fed and inflated prices and use the cash to make MBS loans and then sell those to the Fed too, also at inflated prices.
If I can only get 0.7% yield on a 5 year treasury, what do I do with my cash ... do I buy treasuries and let inflation wipe me out in 5 years, or do I do something riskier.
Think about what you are saying. The effects of QE are mountainous.
Dan, when the reverse repo program began, it immediately drove a huge Treasury rally. The 10yr yield went from 1.78 to 1.12 during the past 4 months.
DeletePossible to get word on bipartisan infrastructure bill today. Schumer says much progress being made.
ReplyDeleteTJ
https://www.tradingview.com/x/hbi7ikjq/
ReplyDeleteTQQQ is holding it's short term bearish positioning for the moment.
T.J I am still counting a potential fourth. If will try to post a chart if you can take a look or let me know if not likely/viable.
ReplyDeleteHere's a view of the cash SPY 15-minutes, ahead of the FED. The 'potential' base channel is drawn in for reference only. A lower low is needed to confirm it. Reminder: FED at the top of the hour..and following.
ReplyDeletehttps://www.tradingview.com/x/zOKp5AHO/
TJ
Fed standing repo. I believe this is just standard repo which is liquidity injection, but haven't read between the lines yet.
Deletehttps://www.federalreserve.gov/newsevents/pressreleases/monetary20210728b.htm
I got a big nothing burger from the actual Fed statement :
https://www.federalreserve.gov/newsevents/pressreleases/monetary20210728a.htm
TQQQ Update. It appears that the proposed C wave has begun. Could it really have happened any other way?
ReplyDeletehttps://www.tradingview.com/x/MnJLDSYE/
If counting a potential ED, hard to tell where your wave 3 and 1 end. Despite clear channel break, move down just looks corrective. SPX is notorious for continuing upward trend following acc. Chanel breaches.
DeleteI don't particularly subscribe to an ending diagonal either but there is no law that says moves can't end with an impulse. I'm looking for a 10 % plus correction - end stop - and we'll see what comes after that.
ReplyDeletehttps://www.tradingview.com/x/RHTInhn4/ TQQQ might be in a thrust out of a triangle type formation - granted that it's not very well proportioned.
My tos ES-mini daily chart shows the slow stoch. embedding today with price above the 18ma. Today appears to be an inside day with no trend on the swingline study. https://tos.mx/Ompaee5
ReplyDeleteThere is a new post started for the next day. Comments remain on moderation.
ReplyDeleteTJ