Buyer Beware: Wyckoff Distribution
It appears that we have a lot of uncertainty ahead and now is a good time to plan ahead to be sure you aren't left holding the bag.
Short Term: Up
Longer Term: Down
If you combine all the buying and selling across all the major indices you start to see the following:
1.) Sell off volume to the downside is higher than buying volume.
2.) Noya indicator showing very strong selling pressure on our recent dip in the New Year.
Incoming catalysts for 2022 & 2023
1.) Fed is tightening.
2.) US10Y already increasing in the anticipation of fed tightening.
3.) Risk of inflation getting out of hand.
4.) China strong commodity demand pushing prices up for commodities for the rest of the world.
5.) Inflation is already starting to show in metals.
6.) Potential energy costs going up on US tension with Russia.
The yellow arrows signify a typical Wyckoff Distribution across the combined indices.
Near Term
I could see the US10Y doing a brief pullback/cooldown so be ready for a fast rip to the upside in the coming weeks — likely from oversold tech stocks. Also watch for lots of pumping of stocks in the media/TV/Fintwit. The hedgies and larger funds need someone to buy the top and hold the bags.
Longer Term
Beware of strong volume of selling from hedge funds and large institutions when price reaches the top of the distribution patterns.
Plan
1.) Move like a sniper and be sure to take profits fast so you can get in and out if volatility remains high.
2.) Monitor the Put To Call ratio and take heed to Warren Buffett and John Templeton's advice and buy when others are fearful and sell when others are greedy. If everyone is buying puts at the bottom of the distribution pattern it is likely that thinks will go up. The opposite is true as price goes to the top of the pattern.
3.) Set your levels and stick to them.
4.) Monitor the selling volume at the top most portion of the distribution pattern. If it is higher than the buying volume then it is clear that smart money is offloading the bags to retail (especially combined with media/TV hype).
Other (late night) thought experiment
If the doomsday scenarios above are true and the Fed is not here to "save" us we should consider that the goal of big money wall street is to extract the most amount of money (usually from retail traders). They need someone on the other side of the trade.
The crash like scenarios aren't as profitable as a distribution pattern where the market goes sideways for many months while smart money gets out, selling the top, selling call and put premium to retail, and positioning short to buy the bottom.
Short Term: Up
Longer Term: Down
If you combine all the buying and selling across all the major indices you start to see the following:
1.) Sell off volume to the downside is higher than buying volume.
2.) Noya indicator showing very strong selling pressure on our recent dip in the New Year.
Incoming catalysts for 2022 & 2023
1.) Fed is tightening.
2.) US10Y already increasing in the anticipation of fed tightening.
3.) Risk of inflation getting out of hand.
4.) China strong commodity demand pushing prices up for commodities for the rest of the world.
5.) Inflation is already starting to show in metals.
6.) Potential energy costs going up on US tension with Russia.
The yellow arrows signify a typical Wyckoff Distribution across the combined indices.
Near Term
I could see the US10Y doing a brief pullback/cooldown so be ready for a fast rip to the upside in the coming weeks — likely from oversold tech stocks. Also watch for lots of pumping of stocks in the media/TV/Fintwit. The hedgies and larger funds need someone to buy the top and hold the bags.
Longer Term
Beware of strong volume of selling from hedge funds and large institutions when price reaches the top of the distribution patterns.
Plan
1.) Move like a sniper and be sure to take profits fast so you can get in and out if volatility remains high.
2.) Monitor the Put To Call ratio and take heed to Warren Buffett and John Templeton's advice and buy when others are fearful and sell when others are greedy. If everyone is buying puts at the bottom of the distribution pattern it is likely that thinks will go up. The opposite is true as price goes to the top of the pattern.
3.) Set your levels and stick to them.
4.) Monitor the selling volume at the top most portion of the distribution pattern. If it is higher than the buying volume then it is clear that smart money is offloading the bags to retail (especially combined with media/TV hype).
Other (late night) thought experiment
If the doomsday scenarios above are true and the Fed is not here to "save" us we should consider that the goal of big money wall street is to extract the most amount of money (usually from retail traders). They need someone on the other side of the trade.
The crash like scenarios aren't as profitable as a distribution pattern where the market goes sideways for many months while smart money gets out, selling the top, selling call and put premium to retail, and positioning short to buy the bottom.
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