S&P500, Long term Price Action OutlookSP500
Hello traders, welcome back to another market breakdown.
Here is an outlook on the stock market state for the year 2023 and the kind of scenarios we might have in the future.
Trade safe,
Tarder Leo.
ES
SPX Model Trading Plans for MON. 01/30The FOMC Decision Week - Day 1
With the FOMC Interest rate decision due this Wednesday, the markets may re-remember the interest rates factor. Whether the Fed's decision and the tone surprises the markets in either direction is going to determine if there would be a reversal or continuation of the recent melt-up in the markets. But, until that happens, the momentum seems to be consolidating.
Positional Trading Models: Our positional models currently are in a neutral bias. Models indicate going short on the close if the daily close is below 4040, with a 35 point trailing stop and a 9-point trailing stop to trigger once the short touches 4020.
By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an instrument that trades beyond the regular session, with the trailing stops - if any - being active in the overnight session.
Intraday/Aggressive Models: Our aggressive, intraday models indicate the trading plans below for today.
Trading Plans for MON. 01/30:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4051, 4044, or 4017 with a 9-point trailing stop, and going short on a break below 4048, 4039, or 4014 with a 9-point trailing stop.
Models indicate no explicit long exits and no explicit short exits for today. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 12:01 pm ET or later.
By definition the intraday models do not hold any positions overnight - the models exit any open position at the close of the last bar (3:59pm bar or 4:00pm bar, depending on your platform's bar timing convention).
To avoid getting whipsawed, use at least a 5-minute closing or a higher time frame (a 1-minute if you know what you are doing) - depending on your risk tolerance and trading style - to determine the signals.
(WHAT IS THE CREDIBILITY and the PERFORMANCE OF OUR MODEL TRADING PLANS over the LAST WEEK, LAST MONTH, LAST YEAR? Please check for yourself how our pre-published model trades have performed so far! Seeing is believing!)
NOTES - HOW TO INTERPRET/USE THESE TRADING PLANS:
(i) The trading levels identified are derived from our A.I. Powered Quant Models. Depending on the market conditions, these may or may not correspond to any specific indicator(s).
(ii) These trading plans may be used to trade in any instrument that tracks the S&P 500 Index (e.g., ETFs such as SPY, derivatives such as futures and options on futures, and SPX options), triggered by the price levels in the Index. The results of these indicated trades would vary widely depending on the timeframe you use (tick chart, 1 minute, or 5 minute, or 15 minute or 60 minute etc.), the quality of your broker's execution, any slippages, your trading commissions and many other factors.
(iii) These are NOT trading recommendations for any individual(s) and may or may not be suitable to your own financial objectives and risk tolerance - USE these ONLY as educational tools to inform and educate your own trading decisions, at your own risk.
#spx #spx500 #spy #sp500 #esmini #indextrading #daytrading #models #tradingplans #outlook #economy #bear #yields #fomc #fed #newhigh #stocks #futures #inflation #powell #interestrates #earnings #earningsseason #chinareopen
Morning Update: Waking up to DownsideThis morning the ES futures are down -43.50 to 4040.75 or just over 1%. I would venture a guess this is repositioning on the heels on Fridays OPEX. This micro structure is underdetermined to be impulsive or corrective as of my morning update.
Below shows the difference.
I am still unclear as to what this larger pattern will ultimately conclude as. First thing is I am watching the micro pattern to see if we finish as an impulsive 5-wave pattern...which could still be an a-wave. As I stated over the weekend, and prior to that, this retrace will provide the answers we need. This pattern is officially busted below 3901.75. So we have a lot of room the chop around before we get answers. I would prefer price stay below 4072 (wave 1 low on micro chart) until it hits the 4007.50 level. That would provide downside overlap and continue to cloud the direction of price.
I'll update during the day if anything crazy happens which I do not anticipate.
PS: I am still short -25 4300 Feb EOM calls which are now profitable.
Best to all,
Chris
Nasdaq NQ - Unpopular Opinion #2,118: 14,000 is ComingEverywhere I look I hear the narrative that we should be making new lows and everyone should be dumping because the Federal Reserve won't pivot and because the inflation keeps going up.
Yet, at the same time that they make that argument, they completely ignore what the Dow Jones did in October, which was no less than a 4,300 point rally forming an outside bar.
Dow has always been the weakest index. It fell farther during Coronavirus Disease 2019 hysteria. It rallied less during the greatest bull market of all time. It dumped more during this year's corrections.
Yet, the Nasdaq and the SPX have lagged it, and lagged it hard, during last month's 2022 Low of the Year recovery.
This should have any bull's interest piqued, and yet, because prices are low, they're not. People just want to get short. Everyone is telling you to look below October's low.
Sometimes I think to myself that people actually like buying high and selling low, if only because they're just very attached to "seeing" and "confirmation." Ordinary people all follow this idea that "I won't believe what I don't see" and are completely unwilling to exercise even a modicum faith.
It's fundamentally irrational.
Yet, if you never change this deficiency, you will never be able to leave the bottom of the Cosmos and the bottom of life. The whales will always eat you, for you will always be plankton.
As with all fractals, take a step back and look at the wider horizon. Nasdaq would have to fall another 10% from its October LOY to bounce off the pre-COVID highs, something which that pesky Dow already did in June.
Not only that, but Nasdaq left two really significant areas of low volume on its way down this year. One of those areas just happens to be right above the August bear market rally highs.
Taking a look at the weekly, we can see that for six straight weeks, Nasdaq trades under equilibrium for the total COVID-panic <--> all time high range.
When people who are trading billion dollar position sizes take a look at this phenomenon, they're looking to get long, but hedging short. Unlike retail, who wants to buy puts thinking that 6,000 will come on CPI Thursday.
On the daily, we can see that there's a lot of manipulation around this trendline superstition. "Meh June low trendline support has become resistance. This is going down!" is what every retail trader has been Pavlov's Dogged into believing and thinking.
Nasdaq tends to be the most wild of the indexes. If Nasdaq had have traded like the Dow just did, it would have traded to 13,000 points.
Assuming that SPX and Nasdaq follow in the footsteps of Dow in this bear market rally, and don't kid yourself, Friday's price action should indicate to you that we're going higher, not heading for new lows, Nasdaq is likely to be more insane than the Dow, and very likely to take out the August bear market high.
While all and all I believe you're looking at a pending 30% rally, from where we stand now, you have 1,000 points to gain being long just to take out the October equal highs. This is enough to formulate trades with and make some good money on without having to take on a lot of risk.
Specifically, some of the key (and not-so key) tech stocks are set up to go totally rocketship. At least in my opinion:
AMZN Amazon - Realistic Expectations In Both Doom and Gloom
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META Facebook/Meta - Too Much Bear, Not Enough Bull
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BBIG Vimco Ventures - A Classic Triangle Pump
Trade carefully. When the Chinese Communist Party falls, it will happen while the US equities market is closed. Indexes will gap down 20% and stocks will gap down 50%. There won't be a recovery because every single bank will be completely risk off.
Almost all of Wall Street has dirty hands providing financial "blood transfusions" to the most evil and murderous regime in all of human history, one which despite having killed many times more people than Hitler, and having perpetrated the organ harvesting persecution of Falun Gong practitioners, has not only remained in power for more than 100 years, but it and its Marxist-Leninism is supported by virtually every government and its people in the whole world.
A lot of people, institutions, governments, and companies will run for their lives the day that Xi Jinping throws the Party away like Gorbachev threw the USSR away, because the nature of having a closet full of skeletons is that once sunlight is cast upon those unprecedented sins, the game ends in Checkmate.
"What an ordinary person believes can happen and what is actually happening are always two totally different things." -Lord Wrymouth
Irregular Expanded Flat on $SPXAs mentioned previously, this is my theory as of what is to come for the SPX.
The fractal is from 2001-2003 as a similar bull trap had played out in the disguise of a "W" recovery or Inverse Head & Shoulders - whatever you wish to call it.
I have also included the alternative, which invalidates the expanding flat corrective wave as per Elliott Wave Theory - closing above $4328.
FED meeting next week will set the tone for what is to come for the market along with yet another rate hike.
We also have several other giants who have yet to report earnings in the following few weeks.
Trade safe out there!
For reference: elliottwave-forecast.com
Special Weekend Update: Looking to the SPX for direction THIS IS A LONG POST SO IF YOURE NOT A BIG READER THIS IS YOUR WARNING:
Today I wanted to try something different and look at the cash market and go through all the scenarios objectively. For those traders who have ever wondered which chart is the chart to determine the direction of the SP500, the SPX cash market or the ES futures ?
It's the SPX cash market.
I have said many times previously that each chart should be considered its own story. The ES (in the above main chart) is a different instrument than the SPX.
Question: Then why even track the ES if our goal is to determine the direction of the SPX?
Answer: For me as a trader I trade ES futures, so why would I track the cash market?
It's a good question. But in truth I do not seek profits in the SPX. I primarily deal in futures options. This post is not about why I choose to do that...that's a conversation for another time. However, when I am selling a strike price and choosing what expiration cycle, the ES is going to provide me the information I need to make those decisions. However, I do think it's a relevant endeavor to check in on the cash market chart to see if it gives me clues or insight into the ES chart. The last thing on this subject I'll share is the ES chart is far more complex. I would even go as far as to say it's twice as complicated as the cash market chart. The overnights provide complex patterns in a low volume environment that as an analyst sometimes can make things very challenging to analyze. But let's dive into the cash market and see what clues, if any, we can ascertain. This post supposes NO BIASES. Bullish or Bearish...I'm looking at all the potential scenarios.
We start from the October Lows:
BLUE PATHWAY
Highlighted in Blue I can count a leading diagonal off the October lows. Now a leading diagonal is a motive wave, which means the prevailing trend is now up, and we should be able to count a 5-wave structure into its ultimate conclusion. If the blue count is correct, then this supposes the October lows could be the bottom for the bear market. Why is that? Because we look for corrective patterns to end and reverse-trend upon observing the developments of motive waves. Motive waves are confined to impulsive 5-wave patterns and diagonals. Nonetheless, I can count a leading diagonal in 5 overlapping waves, followed by corrective price action in a 3-wave structure equating to a wave 2. Currently I would state that price now appears to be in its first subdivision wave 3 (i of 3)...with one caveat, we should be targeting the .618% to .786% fib extension. The .618% extension resides at 4140.81. However, price has yet to breach the 4100 level. This level in the cash market has been rejected twice before. So, if price can get above the 4100 level and stay there...the blue pathway is intact and must not be ignored.
Blue Pathway Conclusion: I would say the next week should provide enough price action to breach the 4100 level and see some sort of reaction to the .618% area of 4140.81. If price does get as high as the 4140.81 level, I think it’s time to adopt a more bullish perspective. However, under the blue pathway if at any time price breaches 3764 then this pattern invalidated. Now 3764 is a long way away from where we are now...so you see price can decline by a lot and still not invalidate the bottom is in thesis. Therefore, the blue pathway has a lot going for it as of now. My issues with the blue pathway are this all starts with a diagonal. Diagonals are notoriously unreliable patterns because they can be interpreted as something else as I will explain next.
BLACK PATHWAY
Highlighted in Black
The black pathway, in my opinion, is a safer pathway for traders to adopt because it doesn’t suppose we are impulsive. You see under the previously explained blue pathway, and impulsive considering the leading diagonal start would point to the possibility of ending as high as minimum target of 4846 and as high as 5349.75. That’s new highs. So, to adopt that analysis and not consider the black pathway which could reach only 4220.39 to 4372.01. The risk here is waiting for price to reconcile higher (blue count), only to find price at NEW LOWS and not new highs. As a trader, price must prove its intentions to me every step throughout the structure. I have received many direct messages criticizing me about the fact that I typically will feature 2, and on occasion 3 potential outcomes on a chart. I have no idea why readers think I should tell them the future of where price will go and give them one outcome. People who read my posts, or who choose to follow me, get my personal trading strategy annotated on a chart who is seeking to profit from his analysis...not provide readers with a money back guarantee. Formulating a trading strategy around the black pathway (which could finish around 4200-4400) is infinitely less dangerous than the previous blue pathway. However, you’ll notice the two pathways follow an initial similar path.
Black Pathway Conclusion: Clearly, I favor the black over the blue pathway mainly for risk management purposes as price approaches the 4200-4400. I have no problem with the black pathway. I have only a slight concern that the “b” wave bottom struck on 12/22 was too quick to be all of the b-wave considering the length of the previous “a” wave. There is no Elliott Wave rule that substantiates my concerns with respect to duration. Let’s just say my intuition is this area will be revisited before going higher. Now my concerns will be alleviated if price breaches 4100 and stays above it. We have come into this area (the area we are now) twice before. If three times is a charm...prove it.
GREEN PATHWAY
Highlighted in GREEN ARROWS
Now, as an analyst, the green pathway solves all my concerns. It fits within the rules of EWT, and It solves not only the issue I have with duration, it solves the overlap issues I have with the leading diagonal (how we started) and the overlapping issues afterwards. It also catches most of the traders off guard as witnessed in the put/call ratio. I will acknowledge sentiment was extremely bearish in October and a retrace of some magnitude was warranted and we’re getting that now. But recently I have taken to listening to the live CNBC stream on my phone while in the office as back ground noise. I noticed the other day; I get the sense from the CNBC guests that sentiment is bullish now, or at least getting more bullish. I see that bullish (or at least constructive) view show up in the fact that traders, by and large, are not too protected from downside. The P/C ratio in the ES on Friday got down to 1.3 that means slightly more traders are buying puts than calls. The normal P/C ratio in the ES is around 1.75-2.0 during uptrends.
Green Pathway Conclusion: I favor this pathway because it solves the time duration between the a-wave and the b-wave. It also reconciles why we have so much overlap in price.
In summary, I am unsure which of the above pathways price will take. When a trader is analyzing corrective price actions there are many forces at play. These forces push, pull and tug on prices in both directions. But in all the above cases, I am expecting a retrace. Whether that retrace is small (as in Blue and Black) or deep (as in Green)...WE SHOULD BE RETRACING SOON. This retrace, and what price does afterwards will provide a huge opportunity for profits.
Let’s not get married to one pathway over another...LET’S LET PRICE PROVE Its INTENTIONS...AND THEN BE PREPARED TO PROFIT.
Best to all,
Chris
ES_F Week Recap. Is there more upside? Review: This weeks agenda was short covering, market got too short under 3930 and we used the covering do drive us higher to our bigger supply areas where we can find more selling. We have successfully arrived at our next bigger time frame supply level. Wasn't an easy week to trade as they didn't make this move up as fun for everyone but levels held nicely and targets were reached. Last few data releases were different than what we are used to and trades take longer to set up so extra patience is required. End of day today we used the short stops that we built second half of the day to unload our inventory and run it up over 4103 where we found more sellers from where we dropped the bid end of day. The way we closed at first seemed bad for the longs in a way that we have trapped inventory over 4084 and that was that, after review it makes me think that possibly we just found supply and dropped our bid to cover lower but I think there is still some more covering to do up here. Doesn't seem like we are ready to reverse just yet..
Overview: Coming week has lots of data so it wont be an easy one, best to take it day by day and let the market show us what we are doing. Sunday Globex will have to show us the next set up... our potential support is under 4084-77, our position end of day was in that area as well. Monday is no news/data day which means less volume and after todays end of day drop we might have less bullish traders in globex so they can buy it back cheaper and try to make another run at it, depends where we open but we should be over T2 range which tells us more shorts are trapped under for potential support and if we run out of supply in 4100-4084 area then we will need to get more over Fridays high which if broken will create more buying to possibly get us to test next supply area. Our support is under 4084-77, red flag if we break and start holding under 4061-56, ideally we consolidate under or above support then start pushing away from 4084 again during RTH BUT since its a big supply area they might try to consolidate then get over 4100 during Globex since there is less volume and use that as support later in the day, if that happens we might will have to watch potential support under 4100 and resistance areas stay the same. Have to be careful up here because size is doing business here and they don't care what anyone thinks as they will get their fill or do what they need to do. We are towards an edge where things like reversals happen but that takes time to play out or can be very quick.
If we did happen to finish this move higher and longs are trapped, we have to start seeing price break and hold below our lower support areas and moving away from this supply, until then they might keep moving it higher.
Levels to Watch: Resistance: 4168-4162 //4143-37 // 4123-19 // 4100 Support: 4084-77 // 4061-56 // 4030-25 // 4012-08 // 3957-53
MACD trendlines offer very good info.All possible MACD trendlines of relevance have been drawn. It is time for the longer term MACD resistance lines to affirm their dominance over the shorter term uptrend MACD support lines.
I think a sell off until mid-february and then a bounce until beggining of march seems like a likely scenario.
Cheers.
#ES_F Friday 1.27.23 Overview Review of 1.26.23: Last night Globex opened and found support on our TPOC location from Monday-Tuesday right above our 4030-25 level. We used the volume from morning data to run the stops over 4046 and get us up against our resistance before RTH Open. RTH opened with the stop run over ON High into Supply area where we found our sellers which took us down and broke morning support but inability to break 4030-25 gave us clues that we have buyers below and we can see that below us on the left that we might have trapped some shorts on yesterdays move back out. We took in all of the supply above and made another run, I assume they might have waited until the end of the day to run it because we had so much supply above, even the push over it was slow and grindy which doesn't mean its weak but to me says lots of sellers and the buyers are just the unwilling shorts getting bought in. Besides the slow and grindy action levels held very nice and targets were hit, in the morning started thinking they might have the juice to get over 84 but with them having to first flush out supply was not enough gas but we hit 77.25 almost to the tick.
Overview for 1.27.23: We will have to see how Globex will set up before PCE Tomorrow but we are now in area of supply, our bigger time frame level above is 4084-4123 which is our pocket of resistance and supply. Since we are up here and covering they might need more liquidity to get covered and with tomorrows data they might try to use that to make a run at it. Depending on how they will play it out I think we can have a very tricky day because we are currently over T2 high, over Monday high but we are within range and willing buyers might be running out, do we flush everyone lower, trap shorts and use that to head over 4084 into supply, do we build a base here get over it and head for that then flush it back down? lots of questions for tomorrow and might be a difficult day. We have our potential support under 4061-56 and 4046-42 levels if we make a run for higher supply area and fail there and start taking out those supports the flush can can be big to the downside. Letting things open and show the way might be a smart thing to do tomorrow;
Levels to Watch: Resistance : 4143-37 // 4123-4119 // 4103-4099 // 4084-77 Potential Support 4046-42 // 4030-25 // 4013-08 // 3994-89
Area to watch is 4061-56 and 4084-77 Tonight and RTH Tomorrow
IF we do happen to get a big move down, better support areas below are 3957-53 // 3944-40 Which is our T2 Low area
Weekend Update: Price still unable to provide clear directionLet me be clear. Sometimes we feel very confident about the market pattern we're trading and on other occasions we don't. For me, this would be the latter. That's why I primarily sell OTM futures options.
Today, we didn't get any definitive clues. I'm sure this choppy action is like death by a thousand cuts for traders on either side of the market. But I have to stand pat in the notion that if this was the pattern set up where the market was going to rally to 4300-4500 area, this would be a C-wave. This would also be mature enough for us to see impulsive action higher. We do not have any impulsivity whatsoever. I believe the market is trying to tell us something. Unfortunately when in the midst of both B-waves and 4th waves, a complex pattern will not reveal what it was until it's in the rearview mirror.
I will acknowledge it's both difficult and frustrating to try to trade for profit in this environment. I am still under the impression we are in an ED for our b of B. Whether that ED is limited to the end of this pattern or the entirety of this pattern (Red Trendlines is ED at the end of this pattern, where as Black trendlines represent the entirety of the pattern) I believe where in a diagonal. Nonetheless, I have Fibonacci Confluence at the 4018 area. Also based on the various micro pattern extensions I have located a PRICE PIVOT target box. It is here where price will have to decide. Break above the black pivot to the upside and we should see 4300, come into and retrace and break below the red pivot and we should see 3875-3840.
Now some could argue this diagonal is a leading diagonal. Ok, I won't argue too much against that, but my point is whether leading or ending, a retrace of a portion, or the whole pattern, is warranted. However, the pivot areas will answer that for us.
So I'm looking for a retrace to get a sense of what we're dealing with. In the meantime I'll be patient. I will advise traders do the same. Taking outright longs or shorts in such choppy action could cause losses, so please know your stops.
Best to all,
Chris
At the level of interest - ES SPX AAPL USOIL et al....SPX is in the area where I think it may reverse although higher highs to end the day is certainly possible.
It has been a hard slog for bears and according to what I'm seeing on the put/call charts, the bets are mostly bullish. This makes sense in terms of price action but under the hood there are some issues.
There are technical reasons why I'm still bearish here, and basically that's what I talk about in the video. I know some will probably criticize this as being "too bearish" and that's fair. However, I don't think I'm imagining what I'm seeing here. The RSI has been very clear when the selloffs looked too weak and I have pointed that out when I saw it. The RSI in particular is now clearly flashing a longer term warning here, which I try to explain.
Good luck and have a great weekend!
Moring Update: Are we in an ending diagonal?Last night I had a social event to attend. A lot of market talk with different opinions...some very dire, some very rosy. I'm thinking to myself the market sure has people guessing right now. I had some DM's asking about being in other patterns that suggest we're moving higher...no doubt because they've been exposed to other analysis. Me on the other hand, I don't follow anyone. I simply looks at the charts.
This pattern looks like an ending diagonal, it fits with the rules of an ending diagonal, but as I have said 100 times prior...it's the way this pattern started that has me thinking we're something complex and it's giving many people fits.
If this is not an ending as I outline above then price should be skyrocketing higher. The market has had a could opportunities to do so and has failed to push impulsively higher. Again, I do not want to get married to analysis if price proves me wrong, and I certainly do not want to loose hard earned profits...but price has a lot to prove.
Above 4090 and I'm starting to think this is something else. But many elliottitions look at the longer duration charts. I happen to believe (as Elliott said) that each smaller time frame pattern is a fractal
of the larger pattern. They're Self-Similar.
Here's a 1 minute chart below. I don't label the smaller time fractals but the overlap makes it hard for me to think we're breaking out. This is how we've traded since December.
The overlap even shows on the smallest of timeframes. Nonetheless, let's see if price can break above 4090 today to get me off this ending diagonal and get some clues as to what we're in. In the absence of that, I'm expecting in the next several days to week, for price to be heading back down into the 3800's.
Best to all,
Chris
#ES_F Thursday 1.26.23 Overview Review: Last night Globex opened and drove under 4030-25 trapping supply over which started our move overnight move. Yesterday we had signs that inventory is still low and someone is buying, Globex was used to drop the bid under Previous day low which helped get us under 94-89 and our T2 Low Support which made more people sell out into the buying under 3976-71. Once selling has stopped the inventory was short and our supply was back over 4030-25, today showed us that there is still size covering and wanting that supply. 4076-71 was look below and fail, once we got back over T2 Low and 3994-89 position was below us.
Overview: Interested to see what we will do in Globex tonight, we still have supply that is coming out from above this 4042 area and now our buyers are under 4025 and under 4012-08. If we break under 4030-25 there might be a chance to visit 4012-08 or close to it, if we wont see a full test or break under it that will show strength going into RTH but it might be a tricky day as we might be trying to get as many sellers shaken out before making another run at bigger Supply area. as long as we are holding over 4000-4012 area there is a good chance to make another attempt higher to 4046-42 // 4061-56 which would be our T2 High and maybe get close to 4084-77. Ideally we don't go there tonight first but instead come down lower and consolidate. If we do get over 4061 at whatever point that is not the best area to add because that is an area of bigger supply and things can come to an end quick. Area to be careful at.
If we do break under 4012-08 - 4000 those will be first red flags and break and hold under 95-89 would be a big warning might change things to the downside pretty quick.
Levels to Watch: 3994-89 // 4012-08 // 4035-25 // 4046-42 // 4061-56 // 408477
Trade Alert: Sell -25 Feb 2023 EOM 4300 calls at $7Raised $8,679 in Premium for next months P&L.
Here's what changed for me today.
Yesterday I said if price breached 4055 I need to see it take out the red trend line. I've been seeing the beginnings of an ending diagonal for a while. The overlap in the beginning when I said these patterns are not going to put us in jeopardy of price getting away from us. Nonetheless price has rallied.
I was counting this as a 1-2, i-ii this morning. Wave iii of 3 is the strongest portion of a move. THIS MARKET SHOULD BE MOVING HIGHER AGGRESSIVELY...It's not. It's now overlapping again where it should be testing 4080-4090 and maybe even tagging 4100. Another thing weighing on my mind is so many charts I track, crypto included, are coming into full patterns off their lows needing a retrace. Sorry to switch gears so fast, but this chart should be showing signs of impulsivity today...and it's not.
Therefore, I have opened up an OTM money short call position mainly to hedge what I've been waiting for and that is a couple hundred point decline to open a short put position in size. If at anytime price breaks above the ENDING DIAGONAL TRENDLINES I'LL RE-EVALUATE by taking an outright long position.
This is a risky trade. I am not advocating shorting the market unless price continues to overlap as outlined above. Ending Diagonals will retrace to their origins. Therefore if confirmed we should decline in purple to 3840-3875 area minimum...and that could just be the "a" wave (in Black).
PS: This post will serve as my evening update as I have plans this evening. I'll answer DMs and Comments to this post.
Best to all,
Chris
Morning Update: Benefit of the Doubt to BLACKI've discussed in the past about technicians and elliotitions getting married to analysis. This is easy to do even for the most experienced analysts. Just the psychology of bottoming and topping turning points Elliott mused that at turning points, traders can't let go of their attachments to the previous trend and before they realize that trend ended, the new trend is well on it's way.
Price has been stubborn to retrace any of it's hard fought gains since the October bottom. Therefore I have to give my black count the benefit of the doubt. In the black count we may move as high as 4080-4090 for i of 3. Purple & Green have little room if any to rally before we retrace hard...but what is actionable trading information is in either case we should expect a retrace of some proportion. Purple and Green counts require a C wave to complete these patterns. C wave can be swift so we look to the structure to determine what count we're in. Purple can complete anywhere in the gray target box...but below 3840 which would be a flat, I have to adopt Green as my primary. Green supposes we're headed to mid 3700 to high 3600's. Now that I have given you the parameters, and I've stated I am giving the black count the benefit of the doubt...we watch to see what unfolds over the course of the next week.
If we get up into the 4080-4090 area I will reopen a Jan EOM 4125-4150 short call position. If we immediately retrace (as in purple/green), I plan to do nothing until I can ascertain a bottoming pattern. I do not believe that will occur in the next couple days.
Best to all,
Chris
Morning Update: YOU ARE HEREAs we trade the day to day...the micro machinations of the SPX and ES Futures, I want to put into context where we are within the overall bigger picture. Having completed our Super Cycle wave (III) and begun to retrace in our SC wave (IV) ...you can barely even see the current decline from the high of January 2022.
Within this Super Cycle wave (IV), we are simply working on completing our b of larger a to come sometime latter 2023-2024. That's right, we haven't even completed a cycle A wave yet. The purple box shows our alternation with Super Cycle Wave (II) which was very deep and quick. That purple box would represent the current magnitude of the SC wave (II) juxtaposed over current prices. Our wave (IV) will alternate and be long ( 2 Decades to complete ) and shallow ( completing at the 2.382% to as low as the 2.0% Fib Support Area ).
Many of you will disagree with this chart. I understand the skepticism. However, cycles being what they are, this chart stands a high probability of becoming a reality... whether we like it or not . SO, as we carve out our profits day to day....remember in the grand scheme of things....
.... WHERE YOU ARE ON THE LONG TERM CHART!
Best to all,
Chris
Evening Update: Today I'm grateful I have Trading RulesThis morning as we were headed towards the lows I decided to close all my short call positions and go flat. Am I bullish? No Am I bearish? No. The uncertainty, with so many counts on the chart, some of which we were coming into the target box, caused me to go flat. I share this with you because as you analyze markets, I want you to trust your intuition. Most of all, when you can look as a chart and say, I'm unclear on the direction....get flat.
I'm still flat as of writing this update.
I mentioned in an update earlier that when price breaches 4055, we're going to 4300. I want to add 1 small caveat. The big red trendline. I want to see price breach 4055 and the red line.
Let me explain, when I get into the 3 min fractals this looks like an ABC a-wave off the lows of today. I know it looks impulsive but with the price action I have now it looks like a 5, 3, 5 right into the 1.0.
Therefore I'm still torn between purple and black. #PRICEPROVEIT
Best to all,
Chris
#ES_F Wednesday 01.25.23 Overview Review: Didn't have enough gas today to get to our supply area, Globex spent most of the night between 4042-430 building up supply, break of that trapped supply from yesterday and overnight above it, that was our first red flag to be cautious today as if we were to continue strong we would have held that area in Globex. Area mentioned for possible support was 4012-08 which we could see pre market that we were holding above, when opened we did failure to break the first sign that level is holding then look below and come back in was the main trade for the day which got us back to overnight supply where we found more sellers and went sideways again over VWAP selling over 4030. Great day, support provided great trades, second half of the day was the hardest today.
Overview: We had an interesting open today, we closed RTH with a stop run over 4046-42 and over 5 hours of selling over Vwap. Opened and drove under that consolidation area trapping the longs making it our supply area going forward. This can be a good chance to see if we have enough supply to break todays low and get more people to sell some, under Previous Low we have our next Potential Support at 3995-89 with has T2 low and position below it, if we have enough selling we can see that area tested but overall we are inside T2 range, judging from todays action we still have shorts trying to cover so I wont be surprised if we still do a test of Monday high and area above it. We have to see what Globex does, for the upside to happen we will have to look strong below 4012-08 and 3094 if we get under them and get back over 4030-25 for final confirmation.
If we get below 3994-89 and hold under it that changes things, until then we can still get good amount of short covering and a run into a supply zone, longer we hold over this area and over the trendline more customers we can have.
Levels to Watch: 3995-89 // 4012-08 // 4030-25 // 4046-42 // 4061-56 Not looking to hold too much above last night unless showing good strength because its bigger supply area.
If selling is strong but not strong enough to get under T2 Low and not enough buying to get over and hold 4030 Then potential for inside day between 4030-4000
SPY Short down to test 385SPY, ES, SPX are set to test the 385 support again now that earnings season has kicked off. Look for a DCB at 385 then flush after January 31st FOMC
SPX Model Trading Plans for WED. 01/25Roller Coaster Ride - Day 2
Our trading plans published yesterday, Tue. 01/24, stated: "With yesterday's daily close above 3985, our models have flipped to a bullish bias and will remain bullish while the index is above 4000. Nevertheless, models indicate a rather choppy market while the index is below 4015".
As hypothesized, the market rolled over overnight and is now on the downward move. Our positional models have negated the bullish bias overnight and are currently in a neutral bias.
Positional Trading Models: Our positional trading models indicate going short on the close if the daily close is below 3975 and above 3960, with a 35 point trailing stop.
By definition, positional trading models may carry the positions overnight and over multiple days, and hence assume trading an instrument that trades beyond the regular session, with the trailing stops - if any - being active in the overnight session.
Intraday/Aggressive Models: Our aggressive, intraday models indicate the trading plans below for today.
Trading Plans for WED. 01/25:
Aggressive Intraday Models: For today, our aggressive intraday models indicate going long on a break above 4002, 3988, 3973, 3958, or 3937 with a 9-point trailing stop, and going short on a break below 3984, 3968, 3955, or 3931 with a 9-point trailing stop.
Models indicate long exits on a cross below 3995, and no explicit short exits for today. Models also indicate a break-even hard stop once a trade gets into a 4-point profit level. Models indicate taking these signals from 10:46 am ET or later.
By definition the intraday models do not hold any positions overnight - the models exit any open position at the close of the last bar (3:59pm bar or 4:00pm bar, depending on your platform's bar timing convention).
To avoid getting whipsawed, use at least a 5-minute closing or a higher time frame (a 1-minute if you know what you are doing) - depending on your risk tolerance and trading style - to determine the signals.
(WHAT IS THE CREDIBILITY and the PERFORMANCE OF OUR MODEL TRADING PLANS over the LAST WEEK, LAST MONTH, LAST YEAR? Please check for yourself how our pre-published model trades have performed so far! Seeing is believing!)
NOTES - HOW TO INTERPRET/USE THESE TRADING PLANS:
(i) The trading levels identified are derived from our A.I. Powered Quant Models. Depending on the market conditions, these may or may not correspond to any specific indicator(s).
(ii) These trading plans may be used to trade in any instrument that tracks the S&P 500 Index (e.g., ETFs such as SPY, derivatives such as futures and options on futures, and SPX options), triggered by the price levels in the Index. The results of these indicated trades would vary widely depending on the timeframe you use (tick chart, 1 minute, or 5 minute, or 15 minute or 60 minute etc.), the quality of your broker's execution, any slippages, your trading commissions and many other factors.
(iii) These are NOT trading recommendations for any individual(s) and may or may not be suitable to your own financial objectives and risk tolerance - USE these ONLY as educational tools to inform and educate your own trading decisions, at your own risk.
#spx #spx500 #spy #sp500 #esmini #indextrading #daytrading #models #tradingplans #outlook #economy #bear #yields #fomc #fed #newhigh #stocks #futures #inflation #powell #interestrates #earnings #earningsseason #chinareopen
Trade Alert: I prefer to be flatIn an abundance of caution and since I have a bottoming count in the black wave 2, I've decided to take my profits off the table. Therefore I have closed my Jan EOM 4100 Calls in which I kept over 80% of the original premium raised and my newly opened 4180 Feb EOM calls in which I kept 35% of the original premium raise for a total amount of $15,231 in premium income for January.
I want to be clear....this is not to say I'm bullish. This is a risk management decision for me.
Best to all,
Chris
Morning Update: Black wave 2 3950-3960We're retracing off of yesterday's close. Since all of my counts require a retrace it will interesting to see which ones are invalidated. I stated a couple weeks back that the bottom we strike here within the this pattern weather it's a wave 2 of c or b-wave, is a bottom to buy for a nice rally to 4300-4500. From time to time I do this so I thought it may be a time to check under the hood of the SPX.
I do not track stocks so I have no long-term EW counts in place....so the below charts are very rudimentary.
Looking at Microsoft, I could debate Microsoft the stock has a 5-wave move up off the low, and a 3-wave move down for a wave 2. This is what you want to see in a bottom. However, price last night hit the .764 retracement post earnings, and but until breach the wave 1 high of approximately $263 we simple have no conclusive clue that the bottom in November of $213 is the bottom. Additionally, breaching the 263 high is just a first clue. So, MSFT has a lot of work to do. I would say the jury is out on MSFT striking a bottom.
Looking at Amazon,
Unlike MSFT, Amazon has positive divergence into its last low, but the stock has not completed 5-up off the bottom. Unlike MSFT that has a full 1-2 in place. Maybe AMZN will pop after its earnings, but it still doesn’t explain why it’s so far behind in the pattern visive MSFT.
MSFT and AMZN are the largest components of the SPX, but these 2 stocks do not do the entirety of the SPX justice. Nonetheless, in looking at the largest 8% of the SPX components...if I was to sum up the SPX/ES charts...it’s only slightly negative. Yes, there are some constructive aspects of the above patterns...but nothing conclusive. Does it signal a constructive rally of some magnitude...You’ll get no argue from me on that conclusion.
If we retrace into the 3950-3960 area today, it's important to note that the next time price breach 4055...we're headed to 4300.
Best to all,
Chris
Evening Update: Markets Stay within a Range TodayNot much to say this evening as we got no clues today. The markets stayed in a range, with no breakouts or breakdowns. The more consolidating we do, the odds start to skew towards the black count unless we get going to the downside soon.
Black and purple suggest any declines will be contained above 3900. The green count, which is what the cash market is signaling, supposes we're about to decline into the 3700's. First and foremost we need to breach today's low of 4005.
Best to all,
Chris
