Topping out on V-day?
Lots of folks believing the virus scare and the correction is over.... on with the bull market!
Not so fast... I think we're still possibly in the midst of wave (v) of this rally which is going to reveal itself as a well-disguised ending diagonal that takes the shape of the July '19 topping pattern fractal. Had that been a real correction, those sell volume candles should've been at least twice as high. Likewise, buy volume has been equally sparse on this recovery rally.
Currently way overbought so I think this shark harmonic is gonna kick it back down to 3300 or so. Probably a fake drop as I'm expecting a bounce from that 1x8 green Gann line. For the index to move significantly higher would mean a throw-over from a year-long 1x2 channel. I don't see any positive catalysts in the near future that could jump start that move so IMO anything higher than last night's overnight high should be a sell. However I must mention that if the shark pattern does play out and we get a bounce at the 1x8, that would start a potential bullish 5-0 that could shoot all the way to 3400+ and the 1.618 extension as well as the 1x1 from the Jan '18 top. For this reason I'll probably TP anywhere along that green 1x8 until I see it break and throw back.
Note that if the index does dump from the 3368 level or so, a correction could be simply in the form of ONE 5-wave impulse since it could mean the entire correction was some kind of flat. My guess is it drives down to the 3150-3170 range and paints an expanded flat to end wave 4. Should it actually follow the rest of the July/August pattern and waterfall we'll be in the 2700s by March. Clearly going to need some sort of significant catalyst for that to happen.
If you don't like losing money while waiting for this bubble to keel over you can always buy GOLD or VIX calls for march.
Not so fast... I think we're still possibly in the midst of wave (v) of this rally which is going to reveal itself as a well-disguised ending diagonal that takes the shape of the July '19 topping pattern fractal. Had that been a real correction, those sell volume candles should've been at least twice as high. Likewise, buy volume has been equally sparse on this recovery rally.
Currently way overbought so I think this shark harmonic is gonna kick it back down to 3300 or so. Probably a fake drop as I'm expecting a bounce from that 1x8 green Gann line. For the index to move significantly higher would mean a throw-over from a year-long 1x2 channel. I don't see any positive catalysts in the near future that could jump start that move so IMO anything higher than last night's overnight high should be a sell. However I must mention that if the shark pattern does play out and we get a bounce at the 1x8, that would start a potential bullish 5-0 that could shoot all the way to 3400+ and the 1.618 extension as well as the 1x1 from the Jan '18 top. For this reason I'll probably TP anywhere along that green 1x8 until I see it break and throw back.
Note that if the index does dump from the 3368 level or so, a correction could be simply in the form of ONE 5-wave impulse since it could mean the entire correction was some kind of flat. My guess is it drives down to the 3150-3170 range and paints an expanded flat to end wave 4. Should it actually follow the rest of the July/August pattern and waterfall we'll be in the 2700s by March. Clearly going to need some sort of significant catalyst for that to happen.
If you don't like losing money while waiting for this bubble to keel over you can always buy GOLD or VIX calls for march.
Note
Feels "ahead" of schedule here... the frenetic pace of pumping belies the divergence in momentum... little accumulation at all this wk despite repeated gap ups. Expecting a parabolic move into the close either this afternoon or the next to 3385.
Note
BTW, I'm no doctor, but ideas about the coronavirus "peaking" already is absurd.For starters the only reason newly reported cases have supposedly "plateaued" in China is because they changed their guidelines on what's considered a new case of COVID-19.
Secondly, I think there are probably vast numbers of unreported cases in poorer countries surrounding China. Case in point: Indonesia is the 4th largest country in the world by population and has a huge ethnic Chinese population that travels to and from China. Yet a first-world state like Singapore which is miniscule compared to Indonesia reports 50+ cases while Indonesia reports no cases at all? Seems like the absence of the virus in these countries is strictly a result of a lack of detection or testing equipment and we've yet to even hear about it.
And finally... the fact that this virus can be transmitted by ppl that don't show symptoms means there are lots of ppl out there that are still spreading it or simply think they have the flu. It's already killed more ppl in a month than SARS has in 7 months.. yet the markets are pumping like mad as if the existence of the virus is a good thing? Feels very fishy to me and with the EW count nearing an end along with the piss poor momentum indicators I think we're gonna see the other shoe drop VERY SOON.
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Right on cue. As expected the Chinese government had been fudging numbers w/ the number of infected cases. Now that the death rate had basically doubled overnight they had to "tweak" the numbers once more to avoid a scary mortality rate.Bulls will no doubt see this as a buying opp, futures already bouncing parabolically. But as I alluded to in the last post, the China #s aren't the thing to watch, it's global infection numbers.
GOLD buyers know what's up... SPX buying is just passive investing and capital shift from foreign markets and will always be the last domino to fall... but fall it will.
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The VIX bounced perfectly off the 1.236 both ways painting a textbook expanded flat. If that is indeed what this is, we're looking at an impulse to 20+ in the next several weeks. Note
LOL as expected bulls jumped all over it like a fat kid on a box of twinkies... NQ is now green because of course increased deaths and infections is good news.Tracking a W topping pattern pretty nicely. Clearly the MMs aren't happy about that bombshell being dropped on them ahead of their scheduled dump date (tomorrow). It never made it to my 3385 spot so it shouldn't surprise anyone that we pump it there this afternoon or gap to it overnight. Again, more people dying and more infections is definitely good for stocks and the economy... LOL
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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.