A market version of the Tet offensive - SPX futures
Updated
Happy New Year to my followers! I hope 2023 will be a successful year of trading for all of you.
I'm presenting a map of what I'm seeing in the market here on the last trading day of the year. I believe we are far more bearish than bullish at this point in time. Surprisingly, we are still quite low on the VIX and put/call ratio charts as of today.
Unless the bulls can get over 3900 today on ES, the bear pennant I'm seeing will stand into next week. If we break below it today, I would think an unexpected sell off for at least the first week of the new year will be upon us. If that leg is a 5th wave, then we should have a healthy bounce afterwards, possibly creating a larger head and shoulders pattern into later January (red path).
If we get a complete meltdown starting next week, then we may have a WXY on our hands and this would be extremely surprising to most market participants (yellow path).
I lean toward the first scenario, but I'm open to the 2nd.
Either way, we are likely going to close the week firmly below the weekly 18 MA (bearish bias) and we are embedded bearish on the daily slow stochastic. We also had the daily 18 ma cross over the 50 and 100ma, a bearish cross. There isn't a lot to be bullish about in my opinion, but with the holidays it does seem like many are just "waiting to see what the new year brings".
If there aren't a lot of shorts in the market next week, the possibility of a faster move down is strengthened, as shorts have to buy the market to close their positions. If there are few buyers, the market could be extremely violent to the downside. With new year inflows from hedge funds, etc. I do expect buyers to step in, which is why I lean towards the first scenario.
good luck to all and see you in 2023!
I'm presenting a map of what I'm seeing in the market here on the last trading day of the year. I believe we are far more bearish than bullish at this point in time. Surprisingly, we are still quite low on the VIX and put/call ratio charts as of today.
Unless the bulls can get over 3900 today on ES, the bear pennant I'm seeing will stand into next week. If we break below it today, I would think an unexpected sell off for at least the first week of the new year will be upon us. If that leg is a 5th wave, then we should have a healthy bounce afterwards, possibly creating a larger head and shoulders pattern into later January (red path).
If we get a complete meltdown starting next week, then we may have a WXY on our hands and this would be extremely surprising to most market participants (yellow path).
I lean toward the first scenario, but I'm open to the 2nd.
Either way, we are likely going to close the week firmly below the weekly 18 MA (bearish bias) and we are embedded bearish on the daily slow stochastic. We also had the daily 18 ma cross over the 50 and 100ma, a bearish cross. There isn't a lot to be bullish about in my opinion, but with the holidays it does seem like many are just "waiting to see what the new year brings".
If there aren't a lot of shorts in the market next week, the possibility of a faster move down is strengthened, as shorts have to buy the market to close their positions. If there are few buyers, the market could be extremely violent to the downside. With new year inflows from hedge funds, etc. I do expect buyers to step in, which is why I lean towards the first scenario.
good luck to all and see you in 2023!
Note
I see a first leg complete here - the 3rd should start soon if this is correct. Note
SPY could still be in the D of the triangle so more chop first is possible - Note
Market is moving like a D wave, so I'm following the spy chart at the moment. This means that the open next week may pop with inflows from funds, but we should fail after the pop up. How far down still not certain. Note
Monthly Candle SPY - reversal after hanging man last month. If we continue selling, I like the area where the lower monthly BB and 50ma is together - around 360) Note
Weekly candle on SPY - two weeks and two dragonfly doji's - just looks like consolidation here, nothing more. They are under all weekly MA's except the 200 at about 366 
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