Hey guys,
Going to post just a written idea and just give you a summary of the data.
Great, now that the summary is out of the way, let's go into a few more details about things and stuff.
First for the DRAMATIC! Let's talk about the bear market.
Oh yeah, I'm saying it, BEAR MARKET.
But I don't actually know if we are heading for a bear market. What I mean by bear market is, if you followed my annual outlook at the beginning of the year, I had R generate 2 forecasts for the year, 1 Bullish and 1 Bearish. I did this as I discovered this was something that other quant firms do, and anything they can do I can do better :-p.
So at the time we had been not really following any forecast, but the assessment was bullish based on closest proximity to forecast, just meaning the trend looked more like it was following the bullish forecast, but not really well.
However, that has since deviated for some weeks, and we are not having a really huge and strong match for the bear market forecast. Let me share this with you below:
As you can see, we are bouncing where it says we are to bounce and we are selling where it says we are to sell. And the correlation and distance measures are now happy because this trend is actually following the projection.
But please understand that I am not saying we follow this to end of year; because frequently I see from looking at other forecasts like this, we can flip between trends throughout the year.
But as of right now, we are following the bear trend.
Based on this trend, we could see a bit of a bounce going into next week; but mostly a tame consolidation period before a pretty drop again in the following week. This is just based on this trend analysis.
Now volume!
I like volume, since my little volume forecast that I was very dismissive about in my last video idea called the complete collapse this week, I think I will be more attentive in the future 😂.
I usually share my fancy 3D volume profiles on my videos. Unfortunately I can't share 3D stuff on a written idea, but I modified a similar function to actually create a heatmap and breakdown the actual composition of the volume, so is mostly buying, selling etc. The more red, the more selling the more green, the more buying.
Here is the volume composition at various intervals:
The implications of these plots are to probably be short biased towards the 585 range, as there is a ton of recent selling in this zone.
On the larger look (25 days and above) it has been all selling for a quite a while.
I know some other traders using OBV have pointed this out that, for a while, volume has been very tilted heavily in the bearish direction, hence why SPY was at a stand still at the recent highs, but you can really visualize the reality of the situation with this function/plots.
Another thing we can see from these plots is that there is not enough buying happening currently to really sustain a huge bounce. However, like I said before, volume can decide to show up whenever she wants!
You can also see a lot of trapped bulls in the volume, who were buying at highs.
EMA Nonsense
All eyes were on the EMA 200 this week. People betting their life on the 200 EMA bounce.
There was a fake breakdown and then recovery.
But let me tell you my little trader love muffins, its not bullish.
I quickly created a function to just scan when we cross below the EMA 200 and then close above it, how often do we end up actually giving it up and falling and closing below it, how long does it take and what is the anticipated decline from this happening.
And by god, R always delivers. Here are the results for SPY, SPX, ES1!:
When looking at the results, good to know, the length of the data contained.
For SPX, n number of data points = 24932, start date 1871-02-01
For ES1!, n number of data points = 6955, start date 1997-09-09
For SPY, n number of data points = 8082, start date 1993-01-29
The data tells us that we can potentially see a 2% bounce to the upside next week.
However, the overarching bias of these results actually align well with the annual assessment, which has this upcoming week as consolidation before another drop (with the average n days elapsing between the initial test of the EMA and the loss of the EMA being 8 days, bringing us to losing the EMA 200 next week).
That is the data.
I have no opinions.
In this idea, I am just sharing the objective data, you do with it as you wish.
As always, not advice, I do really strongly encourage everyone to position defensively and be careful!
Safe trades to all!
Going to post just a written idea and just give you a summary of the data.
- The math levels are in the chart above.
- We are in a pretty strong downtrend on the hourly and daily as you can see from the Tradingview Linreg tool.
- The reference target on the week (yellow line) corresponds to retracing to the top of the range, from there we see either rejection or a breakout.
- Projections have spy retracing/selling -2% on the week from where it opens on Monday.
- Best fit bullish target on the week: 583.69.
- Best fit bearish target on the week: 569.32.
- Expect retracement to 572 range on Monday.
- SPY and SPX broke the 200 EMA then reclaimed it. This is actually not a bullish sign, traditionally during pullback we would expect ultimate support at 200, not a break and reclaim. More on that in the details that will follow in this idea.
- We are seeing a ton of selling volume and almost an absence of buying volume (more on that in the bulk of the idea).
- We have now adopted the bear market forecast from my annual forecast projections I shared earlier this year (more on that in the bulk of the idea below)
- The relevant EMA targets are visible in the chart above.
Great, now that the summary is out of the way, let's go into a few more details about things and stuff.
First for the DRAMATIC! Let's talk about the bear market.
Oh yeah, I'm saying it, BEAR MARKET.
But I don't actually know if we are heading for a bear market. What I mean by bear market is, if you followed my annual outlook at the beginning of the year, I had R generate 2 forecasts for the year, 1 Bullish and 1 Bearish. I did this as I discovered this was something that other quant firms do, and anything they can do I can do better :-p.
So at the time we had been not really following any forecast, but the assessment was bullish based on closest proximity to forecast, just meaning the trend looked more like it was following the bullish forecast, but not really well.
However, that has since deviated for some weeks, and we are not having a really huge and strong match for the bear market forecast. Let me share this with you below:
As you can see, we are bouncing where it says we are to bounce and we are selling where it says we are to sell. And the correlation and distance measures are now happy because this trend is actually following the projection.
But please understand that I am not saying we follow this to end of year; because frequently I see from looking at other forecasts like this, we can flip between trends throughout the year.
But as of right now, we are following the bear trend.
Based on this trend, we could see a bit of a bounce going into next week; but mostly a tame consolidation period before a pretty drop again in the following week. This is just based on this trend analysis.
Now volume!
I like volume, since my little volume forecast that I was very dismissive about in my last video idea called the complete collapse this week, I think I will be more attentive in the future 😂.
I usually share my fancy 3D volume profiles on my videos. Unfortunately I can't share 3D stuff on a written idea, but I modified a similar function to actually create a heatmap and breakdown the actual composition of the volume, so is mostly buying, selling etc. The more red, the more selling the more green, the more buying.
Here is the volume composition at various intervals:
The implications of these plots are to probably be short biased towards the 585 range, as there is a ton of recent selling in this zone.
On the larger look (25 days and above) it has been all selling for a quite a while.
I know some other traders using OBV have pointed this out that, for a while, volume has been very tilted heavily in the bearish direction, hence why SPY was at a stand still at the recent highs, but you can really visualize the reality of the situation with this function/plots.
Another thing we can see from these plots is that there is not enough buying happening currently to really sustain a huge bounce. However, like I said before, volume can decide to show up whenever she wants!
You can also see a lot of trapped bulls in the volume, who were buying at highs.
EMA Nonsense
All eyes were on the EMA 200 this week. People betting their life on the 200 EMA bounce.
There was a fake breakdown and then recovery.
But let me tell you my little trader love muffins, its not bullish.
I quickly created a function to just scan when we cross below the EMA 200 and then close above it, how often do we end up actually giving it up and falling and closing below it, how long does it take and what is the anticipated decline from this happening.
And by god, R always delivers. Here are the results for SPY, SPX, ES1!:
When looking at the results, good to know, the length of the data contained.
For SPX, n number of data points = 24932, start date 1871-02-01
For ES1!, n number of data points = 6955, start date 1997-09-09
For SPY, n number of data points = 8082, start date 1993-01-29
The data tells us that we can potentially see a 2% bounce to the upside next week.
However, the overarching bias of these results actually align well with the annual assessment, which has this upcoming week as consolidation before another drop (with the average n days elapsing between the initial test of the EMA and the loss of the EMA being 8 days, bringing us to losing the EMA 200 next week).
That is the data.
I have no opinions.
In this idea, I am just sharing the objective data, you do with it as you wish.
As always, not advice, I do really strongly encourage everyone to position defensively and be careful!
Safe trades to all!
Note
I would be lying if I said I wasn't surprised by today, it took me a little off guard despite the bearish probability on the day. So I have nothing to add aside from we are really needing to see a bounce.
And I need to add clarification to the statistics I collected from the EMA 200. So the average decline now that the EMA 200 is officially lost is 5% on average from the daily close of the EMA losing day. So that would be 5% from the close of today at 560. So that puts the target roughly 532 ish.
Note
SPY found support where it should, at the 99% confidence low level (meaning there is only a 1% probaiblity we close the week below this level). The possible outcomes for the week are:
a) Consolidate with a tempestuously bullish bias (the market isn't bullish and its hard to gain traction to the upside as you see, which is why I say tempestuous) with a retrace of 570.
b) Consolidate sideways without making much progress in either direction.
c) Break below the range and continue to sell, but keep in mind the probability is 1% for this to happen.
Note
I forgot to add, the probability of a, a retrace to 570 is around 91%. So I am leaning more towards a but don't suggest swinging.
Note
No bullish retrace guys.Straight to hell in a hand basket, lmao.
Enjoy the ride!
If you're looking for:
- Live Updates,
- Discord access,
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Consider joining my trade group at:
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- Live Updates,
- Discord access,
- Access to my Proprietary Merlin Software,
- Access to premium indicators,
Consider joining my trade group at:
patreon.com/steversteves
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.
If you're looking for:
- Live Updates,
- Discord access,
- Access to my Proprietary Merlin Software,
- Access to premium indicators,
Consider joining my trade group at:
patreon.com/steversteves
- Live Updates,
- Discord access,
- Access to my Proprietary Merlin Software,
- Access to premium indicators,
Consider joining my trade group at:
patreon.com/steversteves
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.