SPX500 / ES / SPY - Enjoy the Party While It LastsThe period of market activity following the November CPI pump has been both a choppy grind and hard to get a handle on. I had personally believed that the market makers would run 3,700 long ago, but that we wouldn't set new lows.
Turns out, after much deliberation, they ran 4,150 instead and dumped it back to 3,800 but still haven't taken 3,700.
When trading, anyone who genuinely "knows" what is going to happen also isn't allowed to speak to the public. There are contracts binding their mouths with big penalties for violation.
Ergo, literally all of us who are trying to do this are making a best-basis effort to anticipate what's going on and what's going to happen with limited information available.
What this means is that to increase your accuracy and avoid blowing yourself up, you have to continually revaluate what you think is going to happen on the basis of what is actually happening in front of you. This is an important ability to build, but there's a lot of inner obstacles. You can only do it via determined and diligent mental and emotional self cultivation and improvement.
All on its own the last 45 days of price action tells us something. The December FOMC rendezvous with the September CPI dump formed a double top where big, big fund positions selling short will be carrying market buy orders to exit their positions as part of their risk model because "resistance was broken."
In terms of the market retracing and coming back to take out that level, this doesn't always work out, as seen on both Tesla at $315 and WTI Crude at $93.
But, when combined with this three week period of "bear flagging" (it's just consolidation) and, as we saw on Friday with an unwillingness to trade lower even on Non-Farm Payroll day, arguably the third most volatile news driver of the month behind CPI and FOMC, it tells us more.
Looking at daily candles,
The fact that the market makers appear to want to trade higher without trading just a little bit lower to take the giant fund sell stops at 3,700 indicates to me that the biggest cowboys are actually long and the intention is to keep selling.
Now, you're probably used to thinking, "Doesn't the price go down when big money is selling? Doesn't it go up when they're buying?" The answer to that is yes, but no.
Think about it: if the banks were to sell low and buy high and then buy high and sell low, like you do, wouldn't there be a 2008 financial crisis all the time? Wouldn't they also blow their accounts like you do?
Instead, although it takes a lot of money to buy and sell the orders planted along the way, the reality is that big funds and banks are selling on green and buying on red.
Selling on green and buying on red.
I've heard if you work at a trading desk and you buy on green and sell on red you'll quickly find yourself holding a filing box on the sidewalk waiting for the Uber to take you back to your apartment.
This is really worth thinking about.
Looking at monthly bars, last January was a 600 point nuclear month. The algorithms, although they do perform fractals on a consistent basis, generally, do not like to repeat themselves in such an obvious way.
Ergo, expecting January '23 to be a big nuclear month may be a bit of an error in judgment.
I think everyone now understands that the global economy is in big trouble, the living environment is in trouble, and on top of that the central banks aren't in the mood to run a bailout or a rate cut to save markets from crashing.
And yet, they don't crash.
That's because it's the same idea as the blade of a guillotine. Before you drop the hammer and decapitate your victim, you first slowly pull the rope so the knife is hanging high over head.
"The bigger they are, the harder they fall."
I believe that what we're about to see happen is SPX 4,230. There's a gap conveniently placed right above the double top from before September CPI. Both this and the late December pivot @ 3,79x are both very obvious on weekly candles.
Once we get there and everyone has turned bullish again and forgotten where they are in the diagram, then it's time to start looking seriously at getting risk off and buying puts.
Once the calamity really starts to unfold, you aren't going to see consolidation like this and we're not likely to get big bounces along the way. The kind of 200 points down one day 200 points up the next saw during COVID hysteria also isn't likely to unfold.
It's just a question of what the catalyst will be.
And that catalyst may very well come in the form of "China."
I say "China" because although it may unfold in the nation of China, the issue is the Chinese Communist Party. You really have to separate that rogue regime from "the Chinese people" and "the Chinese nation."
China is being absolutely sacked by Wuhan Pneumonia. The pandemic situation there is not like the COVID pseudo-pandemic we saw in North America. And this situation has been true for the better part of 3 years.
Although the CCP covers it up and hides the data, just like they did during 2003 SARS, nobody seems to have learned their lesson that the regime is a chronic liar. Or at least, when it comes to the topic they exercise "Three Monkeys."
One day that isn't all that far away, Xi Jinping and the Party will really be unable to contain reality any longer. In the same way that a forest fire that's absolutely out of control and absolutely raging will eventually roll towards the city (See 2016 Fort McMurray wildfire) and start smashing up industry, people, lives, and the regime for real.
The warnings signs of this will be kept quiet by western media until it can't be hidden any longer. So you likely won't get much notice besides that prices stay high while volume drops and the USD and VIX start going on a "weird" moon mission.
When it starts, you'll be greeted by unprecedented Monday morning breakaway gap downs that never recover.
Ultimately, what I want to say to everyone who reads this is that the tribulation won't be limited to China's borders and will quickly become international. It will be the kind of thing that global governments cannot keep a handle on, either, and the problem will concern more than your stock portfolio.
To evade and escape the disaster, it's absolutely critical that you do your part to oppose, reject, and stop supporting the Chinese Communist Party and all the Marxist-Leninist, socialist things it has spread around the world during the last 23 years via the United Front Work Department.
It's a choice you both have to make, and one you'll be forced to honour by history.
