I wanted to give an overview update for those who've followed my macro thesis over the years.
I've used various different things to support it but when it's come to my thoughts as to when the idea has failed I've always thought the only thing I really use for that is the big 4.23' of the 2008 crash.
Since 2019 I've used the thesis big fib levels will foretell big moves in SPX, and it's worked really well.
Inside the theory of trend formation through a fib swing I have been using, the 4.23 is the final boss. It's the biggest most important swing and at it everything is high stakes.
4.23 rejections can lead to 1.27 retracements. In the context of this chart, that would be a depression style move.
When this area was first hit in 2022 it made the high there. One of my known for 4.23's is they'll often bluff and then have some sort of spike out.
So if the 4.23 is actionable, we'd be in the end game now. Trying to work out exactly how much spike tolerance is very difficult but in the bear thesis this trading above the 4.23 should turn into a strong rejection. I'm talking conditions where weekly charts look like the 4 hour charts did in the original 10% break.
What would happen on a 4.23 reversal would be unspeakably bad with the size of these swings, and this 4.23 principle can be found time and time again marking the end of extreme moves (both up moves and crashes).
That's a concerning thing. If there's even a 5% chance of that happening I feel I have to think about it. Based on the odds of the fibs, the odds would be higher.
It'd be fair to say thinking a fib can affect such big things is irrational. But it would be honest to accept to ignore the fact they actually have right in front of us is all the more irrational.
But the 4.23 might break!
It's difficult for me to tell you the specific price at which I'd consider the 4.23 to have been broken but I can tell you the idea that it might break is something I deeply consider- because if that is going to happen, my bear thesis would never be correct inside a workable time/price move. This isn't a "Right eventually" sort of thing. The patterns have expectations.
If the 4.23 is not a top, then the plan totally changes. Because I know from my intraday / week trading that I really love to be fading 4.23s and 4.23 spikes regularly but if and when they fail the most exceptional of things happen. These are not all that notable intraday to anyone other than levels traders, but what if the same concept scaled up - I wondered.
I wondered this a while ago and noticed it was something I'd never really checked. As it happened, all the 4.23s I looked at in indices reversed.
Initially I found it tricky to find them but then I noticed the highest probability place to find them was heading into bubbles.
And this makes me super wary of the fact my bear thesis could be spectacularly wrong. Because around about this zone Nasdaq was getting into a 4.23 - and this looked quite bubble-like.
If I'd seen this in real time in the 4.23, I'd have thought that worth a fade.
1998. The Nasdaq did not make a high in 1998!
1998 was in fact a rather bad time to have a persistent bear thesis.
But you could have made money.
For a while there was a flux. During this you could have made some money. You'd just have to know when to stop doing that.
Inside a thesis such as this, when there is a drop you always have to consider we might be in a spot something like this.
From this move Nasdaq would go into a rally that literally changes the perspective of the chart. As you click through bar by bar the previous crash bars become hard to see.
Nothing but up.
Then sideways.
Nothing but up.
Then we're inside of the topping zone.
If you didn't decide before the fact, where do you drop the bear thesis there? It's tough. Because the rally section would seem like a blow off. Then we go sideways. Which feels like the steam has ran out. Then we go into the real blow off. Where to close your short would be handled for you if you didn't - but it's hard to know when you'd flip bull there.
For me, at least. Because I'd want to buy a crash move. And there really are not all that many of them. My style of trading is optimised for trading reversals (either of corrections or absolute) and steady and persistent pullback-less trends are trickier for me. I need to have a really good idea of where I'd want to switch to that style and my failure conditions (because all that momentum trading with no stops stuff isn't for me - I could not sleep at night - being someone who's benefited from so many major trend reversals and seeing how fast they happen).
Looking through different examples of 4.23 breaks (which really are mostly found before bubble like moves or crashes if inverted) I have come to conclusion that the best thing to have done would have probably been to buy the low of the last crash before the bubble.
Just buy the low before the bubble. That's it. Thanks for reading!
Of course, on a more practical level - we actually have to try to do that. Now...if the break was coming, we'd maybe actually be AT that spot.
I think to give the bearish 4.23 thesis its full fair chance we have to accept some sort of stop running above this recent high.
Stuff like that is totally fail game. Even something a bit more spikey would be fine if it rejected. But if we trend up here, break highs and then continue to trend up, I really do think that would be the conditions where I would stop generating bear short levels. I'd switch my methods to generating bear risk areas but main using these for bullish trail/breakout decisions.
I first came into indices in 2019 with my bear thesis on SPX. Which was spectacularly half right. But I'd forecast a two leg crash. Fortunately enough for me, when the high was broken I became disinterested in SPX and went back to Forex. Only setting an alert for the next big level, which triggered 2021. This is when I setup the "HoleyProfit" username.
This period of time has been the best time to be a bear inside of my trading lifetime. But I believe if we're not somewhere deep inside the end game for this bull market we could head into conditions where if you trade flawlessly as a bear you can perhaps scrape breakeven eventually. Which are not good times to be a bear. They'd be good times to be a bull.
If I don't think about this, we could have a move that looks like an obvious blow off in SPX to me.
And ends up looking like this.
Which I don't want to be short into. And realistically I'm not. I'd hit stops well before any of that madness affected me. But I don't want anyone who's followed my ideas and seen these having the big previous successes thinking it's a slam dunk sort of thing. I do believe if my bear thesis failed it would be spectacularly.
I believe we're in a bubble. Whether we're late or mid bubble I am open minded to.
Being mid bubble and being aware of it would be INCREDIBLE. Some people think I am determined to be a bear just because I want to be. I'd be happy with massively awesome markets. A trend one way or the other pay just as much to me. It's better to make money in conditions your broker and bank are not going out of business.
I really don't mind being bullish. It's just sketchy doing it at major resistance levels with all the other weird confluences (like interest rate patterns etc).
We are somewhat close to crux in this thesis. Hopefully you can easily understand how it's not practical to put a price on specifically but I do want to note that while I have plans to short different bull trap levels / spike outs on this rally - we are getting the point where my net thesis may be proven wrong on the large reversal.
If that happens, my option and style will be become polar opposite. For me to continue to be bearish above the 4.23 would be me just wandering off into a jungle of random for trying to have an overall plan. And in fact, for me to not switch my bias from bear to hyper bullish on a 4.23 would be intellectually dishonest and directly fading the edges that the original idea bet on.
Markets may make big reversals at major resistances, but if they break- can be much different.
I wanted to be clear and thorough on this while while are still generally low. While I've discussed some different bear plans into a rally, it is also one of my considerations that this rally could end up spelling out the end of my bear thesis if we made new highs and were persistent.
The net bear thesis will be right or wrong inside a specific zone. That zone is big and tricky to define, but it's specific. Specific in the fact that I'm saying we're specifically in that zone.
There's potentially for setups that could take a lot of time to complete, but in terms of the zone and conditions what's accepted is getting narrower and narrower.
It is entirely placeable within the next 6 months my entire macro swing bias will have changed.
Or this might all just be the bull trap taking. We'll see how it goes.
I've used various different things to support it but when it's come to my thoughts as to when the idea has failed I've always thought the only thing I really use for that is the big 4.23' of the 2008 crash.
Since 2019 I've used the thesis big fib levels will foretell big moves in SPX, and it's worked really well.
Inside the theory of trend formation through a fib swing I have been using, the 4.23 is the final boss. It's the biggest most important swing and at it everything is high stakes.
4.23 rejections can lead to 1.27 retracements. In the context of this chart, that would be a depression style move.
When this area was first hit in 2022 it made the high there. One of my known for 4.23's is they'll often bluff and then have some sort of spike out.
So if the 4.23 is actionable, we'd be in the end game now. Trying to work out exactly how much spike tolerance is very difficult but in the bear thesis this trading above the 4.23 should turn into a strong rejection. I'm talking conditions where weekly charts look like the 4 hour charts did in the original 10% break.
What would happen on a 4.23 reversal would be unspeakably bad with the size of these swings, and this 4.23 principle can be found time and time again marking the end of extreme moves (both up moves and crashes).
That's a concerning thing. If there's even a 5% chance of that happening I feel I have to think about it. Based on the odds of the fibs, the odds would be higher.
It'd be fair to say thinking a fib can affect such big things is irrational. But it would be honest to accept to ignore the fact they actually have right in front of us is all the more irrational.
But the 4.23 might break!
It's difficult for me to tell you the specific price at which I'd consider the 4.23 to have been broken but I can tell you the idea that it might break is something I deeply consider- because if that is going to happen, my bear thesis would never be correct inside a workable time/price move. This isn't a "Right eventually" sort of thing. The patterns have expectations.
If the 4.23 is not a top, then the plan totally changes. Because I know from my intraday / week trading that I really love to be fading 4.23s and 4.23 spikes regularly but if and when they fail the most exceptional of things happen. These are not all that notable intraday to anyone other than levels traders, but what if the same concept scaled up - I wondered.
I wondered this a while ago and noticed it was something I'd never really checked. As it happened, all the 4.23s I looked at in indices reversed.
Initially I found it tricky to find them but then I noticed the highest probability place to find them was heading into bubbles.
And this makes me super wary of the fact my bear thesis could be spectacularly wrong. Because around about this zone Nasdaq was getting into a 4.23 - and this looked quite bubble-like.
If I'd seen this in real time in the 4.23, I'd have thought that worth a fade.
1998. The Nasdaq did not make a high in 1998!
1998 was in fact a rather bad time to have a persistent bear thesis.
But you could have made money.
For a while there was a flux. During this you could have made some money. You'd just have to know when to stop doing that.
Inside a thesis such as this, when there is a drop you always have to consider we might be in a spot something like this.
From this move Nasdaq would go into a rally that literally changes the perspective of the chart. As you click through bar by bar the previous crash bars become hard to see.
Nothing but up.
Then sideways.
Nothing but up.
Then we're inside of the topping zone.
If you didn't decide before the fact, where do you drop the bear thesis there? It's tough. Because the rally section would seem like a blow off. Then we go sideways. Which feels like the steam has ran out. Then we go into the real blow off. Where to close your short would be handled for you if you didn't - but it's hard to know when you'd flip bull there.
For me, at least. Because I'd want to buy a crash move. And there really are not all that many of them. My style of trading is optimised for trading reversals (either of corrections or absolute) and steady and persistent pullback-less trends are trickier for me. I need to have a really good idea of where I'd want to switch to that style and my failure conditions (because all that momentum trading with no stops stuff isn't for me - I could not sleep at night - being someone who's benefited from so many major trend reversals and seeing how fast they happen).
Looking through different examples of 4.23 breaks (which really are mostly found before bubble like moves or crashes if inverted) I have come to conclusion that the best thing to have done would have probably been to buy the low of the last crash before the bubble.
Just buy the low before the bubble. That's it. Thanks for reading!
Of course, on a more practical level - we actually have to try to do that. Now...if the break was coming, we'd maybe actually be AT that spot.
I think to give the bearish 4.23 thesis its full fair chance we have to accept some sort of stop running above this recent high.
Stuff like that is totally fail game. Even something a bit more spikey would be fine if it rejected. But if we trend up here, break highs and then continue to trend up, I really do think that would be the conditions where I would stop generating bear short levels. I'd switch my methods to generating bear risk areas but main using these for bullish trail/breakout decisions.
I first came into indices in 2019 with my bear thesis on SPX. Which was spectacularly half right. But I'd forecast a two leg crash. Fortunately enough for me, when the high was broken I became disinterested in SPX and went back to Forex. Only setting an alert for the next big level, which triggered 2021. This is when I setup the "HoleyProfit" username.
This period of time has been the best time to be a bear inside of my trading lifetime. But I believe if we're not somewhere deep inside the end game for this bull market we could head into conditions where if you trade flawlessly as a bear you can perhaps scrape breakeven eventually. Which are not good times to be a bear. They'd be good times to be a bull.
If I don't think about this, we could have a move that looks like an obvious blow off in SPX to me.
And ends up looking like this.
Which I don't want to be short into. And realistically I'm not. I'd hit stops well before any of that madness affected me. But I don't want anyone who's followed my ideas and seen these having the big previous successes thinking it's a slam dunk sort of thing. I do believe if my bear thesis failed it would be spectacularly.
I believe we're in a bubble. Whether we're late or mid bubble I am open minded to.
Being mid bubble and being aware of it would be INCREDIBLE. Some people think I am determined to be a bear just because I want to be. I'd be happy with massively awesome markets. A trend one way or the other pay just as much to me. It's better to make money in conditions your broker and bank are not going out of business.
I really don't mind being bullish. It's just sketchy doing it at major resistance levels with all the other weird confluences (like interest rate patterns etc).
We are somewhat close to crux in this thesis. Hopefully you can easily understand how it's not practical to put a price on specifically but I do want to note that while I have plans to short different bull trap levels / spike outs on this rally - we are getting the point where my net thesis may be proven wrong on the large reversal.
If that happens, my option and style will be become polar opposite. For me to continue to be bearish above the 4.23 would be me just wandering off into a jungle of random for trying to have an overall plan. And in fact, for me to not switch my bias from bear to hyper bullish on a 4.23 would be intellectually dishonest and directly fading the edges that the original idea bet on.
Markets may make big reversals at major resistances, but if they break- can be much different.
I wanted to be clear and thorough on this while while are still generally low. While I've discussed some different bear plans into a rally, it is also one of my considerations that this rally could end up spelling out the end of my bear thesis if we made new highs and were persistent.
The net bear thesis will be right or wrong inside a specific zone. That zone is big and tricky to define, but it's specific. Specific in the fact that I'm saying we're specifically in that zone.
There's potentially for setups that could take a lot of time to complete, but in terms of the zone and conditions what's accepted is getting narrower and narrower.
It is entirely placeable within the next 6 months my entire macro swing bias will have changed.
Or this might all just be the bull trap taking. We'll see how it goes.
Note
The thesis these fibs can be used to forecast big moves has been massively successful. That same method would forecast SPX doubles if the 4.23 isn't the top.
We may be inside of a crash event to 3000 in SPX.
Read the full case with backlog of historic analysis/forecasts here: holeyprofitnewsletter.substack.com/p/the-case-for-3000-in-spx
Read the full case with backlog of historic analysis/forecasts here: holeyprofitnewsletter.substack.com/p/the-case-for-3000-in-spx
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
We may be inside of a crash event to 3000 in SPX.
Read the full case with backlog of historic analysis/forecasts here: holeyprofitnewsletter.substack.com/p/the-case-for-3000-in-spx
Read the full case with backlog of historic analysis/forecasts here: holeyprofitnewsletter.substack.com/p/the-case-for-3000-in-spx
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.