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Editors' picks

Will Exxon march higher or perform a fake out?Since our previous post on Exxon Mobil, it has increased significantly in value against our expectations. Unfortunately, with the upcoming earnings, the stock might get an additional boost in price, which is already hovering near all-time highs. As a result, XOM breaking above $114.66 will force us to abandon our price target on the downside. However, even if a breakout occurs, we will continue to pay close attention to subsequent price action and monitor volume very closely. To support the idea of a fakeout, we would like to see a continual drop in volume accompanying price growth on the daily chart (just like on the monthly chart). As for the outlook beyond the short-term, we remain worried that ranging oil prices between $70 and $85 per barrel will threaten the well-being of this stock title. Furthermore, higher taxes on energy companies, economic slowdown, and oil down more than 35% since its 2022 peak will put pressure on further price increases. Illustration 1.01 Illustration 1.01 shows the hourly chart of XOM. The yellow arrow points to a technical glitch at NYSE, which saw multiple stock companies plunge and turn on circuit breakers. We can potentially discard this movement. Illustration 1.02 Illustration 1.02 displays the monthly chart of XOM. The red arrow indicates a continual decline in volume, which is a bearish technical development. Illustration 1.03 Illustration 1.03 shows the daily chart of XOM and the updated setup. Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
Editors' picks
17
SPX Triangle Will Break Soon but Which Way?Which Way Will the SPX Triangle Break? Consider All the Arguments Ever since the October 2022 lows, the S&P 500 SP:SPX has been consolidating especially when considered on larger time frames like daily and weekly. This consolidation has formed what is known as a triangle pattern (or symmetrical triangle). A triangle is a consolidation pattern that represents equilibrium in the balance between buyers and sellers. The range narrows and price action compresses until the consolidation ends. The Primary Chart above shows the current triangle that has formed. It is essentially a collision between a 3-month uptrend and a 13-month downtrend (lasting over a year since January 2022 highs). So long as price remains in this triangle, uncertainty about the intermediate term direction will likely remain. Many triangles have arisen this year, and each one has led to new lows. This one may as well, as the yield curves and macro data support this outcome. But price could whipsaw out the top of the triangle for a month or two before heading to lows. All possibilities remain on the table. For further discussion on the details of this triangle, please refer to the linked chart and post under Supplementary Chart A below. Supplementary Chart A 1. Arguments for Bear-Market Continuation and Further Declines to New Lows VIX has been trending lower to new lows. But this argument cuts both ways—it lies at multi-year support as well as the support zone for this entire bear market. It’s not a spot to be complacent. On the other hand, VIX could be forming a new seasonal range lower than the past few years. The downtrend in volatility must be respected until it breaks. But the break could be vicious and fast, occurring in a matter of hours / days. For now, VIX keeps failing right at the down TL from early October 2022 peaks. Supplementary Chart B (VIX) Consider the orange-colored down trendline from mid-October 2022 highs. Price continues to fail at that down TL. But price is also in the yellow rectangle, which is the major support / demand zone for volatility over the entire bear market to date. The pink uptrend line is a multi-year uptrend line where VIX has found support since 2017. SPX shows a daily bearish divergence on RSI. But no weekly divergences yet. Stochastics and another indicator (EFI) both show clear divergences on the daily. But sometimes triple divergences form. And sometimes, these divergences are erased with higher price action. Divergence create the conditions for a decline, they don’t guarantee one. And without weekly divergences yet, this minor daily divergence is too weak a signal to take to the bank. As of the December 2022 FOMC meeting, the Fed had not paused and it had not pivoted. In fact, the Fed remained hawkish, communicating a “higher for longer” message to markets. The FOMC’s published SEP (Summary of Economic Projections) showed that rates were forecasted to peak at 5.1% (on average) which was higher than its prior rate forecast of 4.6%. The Fed’s projections also showed that it expected no rate cuts throughout 2023. In other words, higher for longer, even if rate hikes were paused. Will the Fed’s messaging and policy from December 13, 2022, remain steadfast? If so, the markets will likely struggle to find a way higher unless they continue to completely disbelieve the Fed. Note that rate markets (and equity prices) are currently disagreeing with the Fed about rate cuts later this year. That all could change on February 1, 2023. Money supply has continued to shrink. Tom McClellan said to financial media recently that M2SL has been shrinking while GDP has been growing, and this has never happened—the ratio of M2/GDP has never been shrinking this fast. Note that there is a lag b/w M2 changes and the effects on markets. But M2 has been shrinking for a while now. Note that when M2 rises faster than GDP, this can fuel rallies a year later, but this is the opposite of that scenario. However, note that US Treasury Department maneuvering relating to the debt-ceiling crisis could hamper the Fed’s efforts to drain liquidity from markets. Other than its general effect on markets, this maneuvering is well beyond the scope of this article and the author’s knowledge. Consumer spending and corporate profits cannot hold up much longer given the leading economic indicators (PMIs, ISMs, Empire State Manufacturing Index, retail sales reports from December, mortgage applications, and housing data). But equity markets don’t seem convinced. Markets can remain irrational longer than traders can remain solvent. Gold on a ratio chart to SPX (GLD/SPX) is still outperforming. This is not an all-clear signal for equities, especially the blue-chip index of US stocks. Supplementary Chart B (GLD/SPX) Typically, a bear-market bottom / final low does not happen while yield curves remain inverted. One WS analyst stated unequivocally yesterday that 85% of the yield curves are currently inverted. According to that firm's indicators, if more than 55% of the yield curves are inverted, a recession always follows. But when? The timing is the tricky part especially for traders and investors. Bear markets can fool the vast majority. The 3m/10y curve has been inverted to levels not seen since 1981. The inversion has fallen deeper into negative territory than any other inversion on the data available on TradingView’s charts. The final bear-market low typically happens after the Fed has pivoted and cut rates for some time. And remember, when the Fed cuts, it’s not because the economic outlook and corporate earnings are bright. Rather, the Fed cuts because of deteriorated economic conditions, tanking earnings and earnings estimates, horrible employment numbers (a recession). Supplementary Chart C.1 (3m/10y) For further discussion on the 10y/3m yield curve, see the post linked here: Supplementary Chart C.2 Recent PMI data from SP Global was negative economically (US Manufacturing PMI at 46.7 while December was 46.2, and US Services PMI at 46.6 while December was at 44.7) though it moderated somewhat (slightly less negative) from the prior month’s data. “The US economy started 2023 on a disappointingly soft note with business activity contracting sharply again in January. It showed subdued customer demand and impact of high inflation on client spending. January data also indicated a “faster increase in cost burdens at private sector firms. Although well below the average rise seen over the prior two years, the rate of cost inflation quickened from December and was historically elevated.” The commentary by SP Global’s economist provided along with their recent PMI report noted that “not only has the survey indicated a downturn in economic activity at the start of the year, but the rate of input cost inflation as accelerated into the new year, linked in part to upward wage pressures, which could encourage a further aggressive tightening of Fed policy despite rising recession risks.” This suggests that even if inflation has peaked, it may not be heading to the 2% target as fast as it moved down from the peak to the current levels. And it implies that stagflation may be around the corner as economic growth slows but sticky inflation does not dissipate. Major past selloffs in markets have been preceded by a very low unemployment (UE) rate. The rate has been as low as 3.5% recently. One analyst, Eric Johnston at Cantor Fitzgerald, noted that investors would do well by buying markets when the UE rate is 9% to 10%, and selling the market when it reaches extreme lows from 3% to 4%. UE rates haven’t begun to significantly roll over, and the Fed has remained focused on the tight labor markets and services sectors as sources of more sticky inflation. So if PMIs from January are showing wage pressures increasing somewhat, that doesn’t suggest the Fed will be *cutting* rates soon, though a pause may be discussed as rates approach 5%. Taxes as a percentage of GDP are at the level that coincides with recessions. Taxes are 18% of GDP. 2. Arguments for a Rally That Precedes New Bear Market Lows First, a rally that breaks the down trendline does not immediately negate the bear market. The 2000-2002 bear market experienced a substantial multi-month break of its down trendline (complete with a successful backtest after the break) before the next major leg down to new lows occured. Supplementary Chart D (2000-2002 Example) SPX continues to stabilize above major support / resistance zones such as 3900 and 3950. And it has closed above 4000 three consecutive days this week: January 23, 24, and 25. When it meets the down TL, it has not been reacting lower the way it has on every other test of the trendline during this bear market. It’s spending quality time with the TL, which is a new phenomenon / characteristic when price and the TL meet. SPX continues to hold above major anchored VWAPs from August, October, and December 2022, which range from 3850 to 3900. AAPL's price action is fairly bullish in the short-to-intermediate term. Here are the bullish technicals arising on AAPL's chart. AAPL’s daily chart shows a failed breakdown beneath major support levels over the past year. AAPL broke below $134.37 and $129.04 and fell to a new low, but quickly reclaimed $129.04 and $134.37, so this constitutes a failed breakdown. The failed breakdown is visible on the daily chart, so this is supportive of prices for several weeks to a couple months. $134.37 was the level coinciding with the lows from October 13 and November 4, 2022. $129.04 was the June 2022 low, which was undercut in December 2022 and early January 2023. Price broke below all these levels and then immediately reclaimed them. AAPL’s failed breakdown coincided with a tag of the parallel downtrend channel from the all-time high. AAPL shows positive (bullish) divergences with momentum indicators on both the daily and weekly charts. AAPL remains right at or slightly above the down TL from the mid-August 2022 highs, which was a fairly steep 5-month downtrend. AAPL remains above a short-term TL from June lows, but it also remains contained in its downtrend channel from the all-time high. AAPL is in no-man’s land, with some bullish forces that brought it here (divergences and failed breakdowns) Supplementary Chart E.1 (AAPL's Failed Breakdown) Supplementary Chart E.2 (AAPL's Parallel Channel Support) NDX (Nasdaq 100) broke above its down TL (linear chart only) and has held above it as well. It also has been making higher lows since the October 2022 lows. Supplementary Chart F.1 (NDX QQQ Log TL) Supplementary Chart F.2 (NDX QQQ Linear TL) IWM broke above its down TL on both log and linear charts. But it remains at critical resistance at the $188-$192 zone. It remains above intermediate term VWAPs from swing highs and lows in August, October and December 2022 (which are around $180), but it still remains below the VWAP anchored to its all-time high. Supplementary Chart G (IWM Linear TL) HYG broke above its down TL. Like other TL breaks, this could ultimately be a false signal, but here it has persisted for some time. HYG had a breakout above its down TL in the 2007-2009 bear market driven by the great financial crisis. This breakout was a false signal b/c the bear market was not over until early 2009, when the SPX made new lows. HYG resumed a downtrend after breaking above its down TL and went back to lows again and made lower lows, a move that coincided with SPX heading to new lows in Q1 2009. HYG shows a small bearish divergence on RSI on the daily chart. Wait for a larger bearish divergence to form on both daily and weekly charts perhaps. VIX has been trending lower to new lows. But this argument cuts both ways—it lies at multi-year support as well as the support zone for this entire bear market. It’s not a spot to be complacent. On the other hand, VIX could be forming a new seasonal range lower than the past few years. The downtrend must be respected until it breaks. VIX keeps failing right at the down TL from early October 2022 peaks. Consumer spending and corporate profits cannot hold up much longer given the leading economic indicators (PMIs, ISMs, Empire State Manufacturing Index, retail sales reports from December, mortgage applications, and housing data). But equity markets don’t seem convinced. Markets can remain irrational longer than traders can remain solvent. Earnings at major publicly traded companies may not be deteriorating quickly enough to disprove the “soft-landing” narrative that pervades markets. Recession does not mean stocks go straight to lows when yield curves have inverted. Recessions take time to unfold, just as the damage to economies takes time when rates are restrictive. There is a lag. Both FTSE and DAX have taken out the highs from mid-December 2022. FTSE is approaching multi-year highs. Both have broken above down TLs from the bear market. Both have decisively reclaimed 200-day SMAs. Both have been forming higher highs and lows Multi-week bear-traps occur frequently where significant down trendlines are broken until the bear market resumes in earnings in a period of several weeks or months. The 2000-2002 bear market provides an excellent example of this. So a break to the upside in the triangle pattern on SPX may last for several weeks or even months before the real downside move begins. Just because it’s been challenging and choppy does not mean it won’t get worse and more trappy. The third year of a presidential term (US markets) is nearly always bullish. There have been exceptions according to Tom McClellan (technical expert citing 1939 as an exception to this rule but noting that Hitler’s army was marching across Poland at the time). Some have said that the most bullish quarter of the presidential cycle is Q1 of the third year (technical expert Mark Newton speaking to financial media on January 24, 2022). Breadth has been strong lately, and some technical analysts have cited “breadth-thrust” indicators as giving bullish signals. Markets continue to disbelieve the Federal Reserve. Consider the differential b/w the Fed’s forecasts and the rate markets forecasts about whether rate cuts will happen this year, and where the terminal rate will be. So even if the Fed remains hawkish at the next meetings, perhaps it won’t matter. Markets will do what they want to do, including "fighting the Fed." You don't have to fight the Fed though or any other central bank. But don't fight the trend either. The Fed’s messaging at the February 1, 2023 FOMC presser may be slightly more dovish, or it may be interpreted as dovish if Powell so much as mentions a pause in hikes, or that the FOMC is discussing a pause. Even if Powell remains hawkish, sometimes markets can interpret the Fed Chair’s statements (sometimes ambiguous) the wrong way—recall that this happened at the July FOMC in 2022, after which Powell cleared up the confusion at Jackson Hole in August 2022 (tanking markets immediately). Equity positioning remains fairly underweight US equities according to financial experts on this subject. This could lead to momentum chase higher to trap all the bears before the real decline gets underway. Maybe stocks continue higher until two things occur: EPS estimates fall further, employment numbers start getting quite ugly, and the Fed is not as accomodative as it has been in past economic recessions (because while inflation has peaked, it may not fall directly to the 2% target, and with easing financial conditions, perhaps inflation could stop falling rise in Q1 2023) Equal-weighted S&P 500 (RSP) has broken above its down TL on a daily close as of January 25, 2023. The offense-defense ratio (consumer discretionary divided by consumer stables) RCD/RHS shows a breakout in this ratio above 8-month highs in the ratio’s value. This potentially signals near-term strength in equity markets as offensive stocks (consumer discretionary) outperform stocks defensive names (consumer staples) ________________________________________ Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed. Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders. DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
Editors' picks
15
Crude oil a leading inflation indicatorTwo observation made the last two years between crude oil and CPI: 1) There were 5 waves up and 2) 3 significant peaks However, between the last 2 peaks of crude, it was a lower low follow-by its downtrend, and CPI followed this downtrend subsequently. Among many commodities, crude oil moves the most in tandem with CPI, but crude seems to lead in this study. Refer to the daily chart on your own, try drawing a downtrend line, you will see crude oil prices has broken above its downtrend line recently. If crude oil is going to transit to an uptrend from here, we will have to track CPI very closely. The inflation fear is still there. Did a video on this observation last week, refer to the link below. Crude Oil Futures Minimum fluctuation 0.01 = $10 0.10 = $100 1.00 = $1,000 10.00 = $10,000 Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Editors' picks
Long
3
Equities Set To Outperform Rickety Real EstateInvestment wisdom states that “the only bad time to buy real estate is later.” Every rule though, has its exceptions. Current US real estate is clearly in exception territory given recessionary fears, high mortgage rates, and dim fundamentals. Real estate sector is the largest store of wealth. It is also the source of significant job creation. Crisis in this sector has massive adverse consequences. Hence, policy makers typically leave no stone unturned in defending the sector. Despite the headwinds, new data released last week show rising mortgage applications on softening rates and real estate prices. This collectively makes an outright short position perilous. Instead, this case study argues that a measured approach would be a spread with a long position in S&P 500 Index combined with a short position in S&P Real Estate Select Sector index. An entry at 20.611 with a target at 22.119 supported by a stop loss at 19.749 will deliver a compelling 1.75 reward to risk ratio with ample upside and limited downside. INTEREST RATES INVERSELY AFFECT ASSET VALUES The value of a financial asset is the cumulative discounted value of all future cash flows. Higher the discounting rate, lower the value. Persistent and sticky inflation is compelling the Federal Reserve to keep rates higher for longer. High mortgage rates are forcing out first time buyers while squeezing leveraged asset owners. Future rents discounted to present value is sharply lower relative to a period when federal funds rate was near zero. With the US Federal Reserve having hiked interest rates by 4.5% in 2022, mortgage rates have doubled in the same period, touching a 20-year high of 6.2%. This has made real estate investments less attractive. With no rate reversals in sight, mortgage rates are likely to stay elevated despite recent softening. Mortgage rates are down a full percentage point from recent peak but still double what they were a year ago. Absent a sector specific relief, real estate stocks will underperform relative to the broader S&P 500 index. Since 2017, this ratio of the S&P 500 index to the Real Estate Select Sector has risen by a stunning 54% over the last 6 years. WEAKENING US HOUSING MARKET After peaking in July 2020, new home sales in the US have trended 37% lower and down to pre-pandemic levels. Existing home sales exhibit similar trend, which have fallen for eleven (11) straight months, point to a frail US housing market. New data released last week point to rise in mortgage demand as rates soften and real estate prices ease. DISTRESSED DEBT IN REAL ESTATE & RISING REDEMPTIONS FROM PROPERTY FUNDS Global property market faces $175 billion of distressed debt. As rates rise, rising financing costs will force leveraged owners to foreclose at fire sale prices. Abrupt stop to years of easy money supply has sent shock waves to the sector. Compounded by a pandemic that has changed the way people work and live, commercial real estate owners are in a precarious place. This predicament is showing up in property funds facing rising redemptions. US-based investment manager - KKR - has imposed limits on redemption from its $1.5 billion KKR Real Estate Select Trust fund (KREST). KKR's cap on redemption echoes a move by Blackstone which announced in December that it would limit investor withdrawals from its $69 billion private real estate fund (BREIT). Starwood Capital also placed caps on redemptions late last year. Investors are hankering for redemption as fears of price correction stemming from high mortgage costs, persistent inflation and an uncertain economy amplified by recessionary gloom. GLOOMY REAL ESTATE OUTLOOK The sector is pessimistic about current and future home sales as evident from NAHB’s Housing Market Index. Over the past six months, new building permits have collapsed drastically as participants see lower demand for new homes. Vindicating these fears are a sharp drop in new building permits which are down 30%. Home order cancellations are also on the rise sharply. With all the impact combined, a rise in unsold inventory hit the markets, with marginal & first time home-buyers priced out of the market due to expensive mortgage rates. The US Federal Reserve is determined to tame inflation down to 2% even at the expense of hurting labor market. Should that occur, a soft labor market reduces appetite for expensive mortgage payments. That would set a real estate contagion in motion, pushing property prices even lower. TECHNICALS POINT TO BOUYANT S&P 500 AND SHAKY REAL ESTATE SELECT SECTOR Since bottoming in November 2022, the S&P 500 Index has rallied 11% as it faces resistance at its long term (200-day) moving average. The S&P 500 Index is trading below its point of control. In contrast, the S&P 500 Real Estate Select Sector index points being overbought based on RSI and is yet to reach its long-term moving average. The index is trading above its point of control making it wobbly and prone to downward correction. TRADE SETUP Spread trade requires that the notional value of a long leg is equivalent to the short leg of the trade. Therefore, five (5) lots of long position in CME E-Mini Micro S&P 500 Futures expiring in March 2023 requires two (2) lots of short position in CME E-Mini Real Estate Select Sector Futures in March 2023. CME offers margin credits for spread trades. Clearing brokers might charge differently from the Exchange imposed margins. CME E-Mini Micro S&P 500 Futures (5 lots): 5 x USD 5 x S&P 500 Index = 5 x 5 x 4015.25 = ~$100,381 CME E-Mini Real Estate Select Sector Futures (2 lots): 2 x USD 250 x S&P 500 Real Estate Select Sector Index = 2 x 250 x 194.65 = ~$97,325 Entry: 20.611 Target: 22.119 Stop Loss: 19.749 Reward/Risk Ratio: 1.75 Profit at Target: ~$7,350 Loss at Stop Loss: ~$4,200 MARKET DATA CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com DISCLAIMER Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. This material has been published for general education and circulation only. It does not offer or solicit to buy or sell and does not address specific investment or risk management objectives, financial situation, or needs of any person. Advice should be sought from a financial advisor regarding the suitability of any investment or risk management product before investing or adopting any investment or hedging strategies. Past performance is not indicative of future performance. All examples used in this workshop are hypothetical and are used for explanation purposes only. Contents in this material is not investment advice and/or may or may not be the results of actual market experience. Mint Finance does not endorse or shall not be liable for the content of information provided by third parties. Use of and/or reliance on such information is entirely at the reader’s own risk. These materials are not intended for distribution to, or for use by or to be acted on by any person or entity located in any jurisdiction where such distribution, use or action would be contrary to applicable laws or regulations or would subject Mint Finance to any registration or licensing requirement.
Editors' picks
Long
15
When downside volatility becomes an advantage.It’s been a while since we looked at the Russell 2000. For the uninitiated, the Russell 2000 index is a small-cap stock market index that is made up of the smallest 2000 stocks in the Russell 3000 Index. The small-cap nature means a few things, volatility tends to be higher for one. And capturing this downside volatility using the Russell 2000 as compared with the S&P 500 has almost always proven more fruitful. When to take this trade you may ask? The recession bellwether indicator of the 2Y – 10Y yield spread is a simple place to start. With the benefit of hindsight, shorting each of the indexes at the peak ‘inversion’ points proves to be a decently successful strategy. Especially so using the Russell 2000. So the next question to ask is if we are near the peak point of inversion? To answer this, we have to circle back to research from last week, where we discussed the expected rate path for the Federal Reserve (Fed). In short, markets seem to be pricing in a Fed pause, followed by a pivot in the coming year. Looking back at the charts, this shift in stance (or pause) highlighted in the top chart generally marks the turning points for the 2y-10y yield curve inversion, highlighted in the bottom chart. Therefore, with markets expecting a pause as early as the first quarter, we suspect that the turning point for the yield curve inversion is just around the corner. On price action, the 1900 level proves to be of significant resistance, with multiple attempts to break through being rejected. As prices creep towards this resistance level once again, we think this might just provide another attractive opportunity for trading. Zooming out to a daily timeframe, the 0.382 Fibonacci levels marked by the previous high and low, also coincide close to the resistance levels on the shorter timeframe. The proven downside volatility, along with the coming turning point in the yield curve inversion, keeps us bearish on the Russell 2000. Additionally, the price action points to significant resistance overhead, around the 1900 level. Setting our stop at 2035 level (one Average True Range away & close to the next resistance level) and take the profit level at 1690, with each 1-point increment in the Russell 2000 futures contract equal to 50$. The charts above were generated using CME’s Real-Time data available on TradingView. Inspirante Trading Solutions is subscribed to both TradingView Premium and CME Real-time Market Data which allows us to identify trading set-ups in real-time and express our market opinions. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com Disclaimer: The contents in this Idea are intended for information purpose only and do not constitute investment recommendation or advice. Nor are they used to promote any specific products or services. They serve as an integral part of a case study to demonstrate fundamental concepts in risk management under given market scenarios. A full version of the disclaimer is available in our profile description.
Editors' picks
5
Game Theory and the US Debt Crisis ShowdownE-Mini S&P ( CME_MINI:ES1! ), Euro FX ( CME:6E1! ), 10-Year Note ( CBOT:ZN1! ) True or False? • US Government has never defaulted on its debt obligations. • US Treasury bonds have always maintained AAA credit ratings. A history lesson: In June 1812, 30 years after the Revolutionary War, the U.S. declared war against Britain and Spain. In August 1814, British troops burned Washington, D.C. With the Treasury building destroyed, Uncle Sam was unable to service its debts for months. Extraordinary circumstance it may be, this was a default, nonetheless. In 2011, the federal government inched close to its $14.294 trillion debt limit. In April, the Standard & Poor’s responded by changing the outlook of US sovereignty debts from “stable” to “negative”. On August 5, 2011, S&P downgraded US credit ratings from AAA (outstanding) to AA+ (excellent). Moody’s and Fitch retained the triple-A ratings. However, they changed the US outlook to “negative”, in June and November, respectively. Global stock markets declined on Monday, August 8, 2011, following the downgrade announcement. Three major U.S. stock indexes lost between 5% and 7% in one day. What happened next blew our mind. U.S. treasury bonds, the very subject of the downgrade, rose in price! Amid the worsening creditworthiness of the US government, the US dollar gained in value against the Euro and the British Pound. This is a classic example of a general flight to safety. “When America sneezes, the world catches a cold” . Deteriorating financial conditions in the US triggers more severe economic crisis in the rest of the world. At the time, investors were concerned about a European debt crisis, and they pulled money out of Europe and into US dollar and bonds. The US Debt Ceiling Per the definition by the US Department of Treasury, the debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments. The debt limit, also called the debt ceiling, does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past. Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans. Congress has always acted when called upon to raise the debt limit. Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit. The current U.S. debt limit stands at $31.4 trillion. Current Debt Ceiling Crisis Last Thursday, in a letter addressed to House Speaker Kevin McCarthy, Treasury Secretary Janet Yellen warned the US has once again reached its debt limit. The Treasury Department started taking extraordinary measures to keep paying the federal government’s bills, but it will suspend new investments until June 5, 2023. Yellen warned both moves are subject to “considerable uncertainty” if Congress does not pass a bill to increase the debt ceiling. Highlights of current US government financials, according to USDebtClock.org: • US National Debt: $31.50 trillion • US Federal Spending: $6.00 trillion • US Federal Tax Revenue: $4.61 trillion • US Federal Budget Deficit: $1.40 trillion • 2022 US GDP: $25.93 trillion • Debt to GDP Ratio: 1.21 A comparison to data from my previous report, “The Real Cost of Fed Rate Hikes”, shows big spending just gets bigger in merely six months: • Medicare: $1.52 vs. 1.40 trillion, up $120 billion • Social Security: $1.25 vs. 1.00 trillion, up $250 billion • Defense: $776 vs. 751 billion, up $25 billion • Debt Interest: $523 vs. 440 billion, up $123 billion It’s worth noting that the Fed hiked interest rates and the Treasury got stuck with bigger interest payments. It’s like a boomerang hitting back at the US government. As I have expected, “Debt Interest” could overtake “Defense” as the third largest budget item. This could happen in the new annual budget cycle starting October, as Treasury gradually retires cheap bonds and must borrow at much higher rates. A Public Showdown on the US Debt Ceiling The White House urged Congress to raise the debt ceiling “without condition.” House Republicans, emboldened by their recent majority party control, are preparing for a hard fight. “You couldn’t just keep increasing it,” said House Speaker Kevin McCarthy. He called for cuts to avoid bankrupting programs like Medicare and Social Security. GOP lawmakers want to slash spending as part of an agreement to increase the debt limit. Some have said major spending cuts to key government programs were part of the negotiations that helped McCarthy win the speakership. Excluding the rare 1814 precedent, the U.S. government has not defaulted on its debt. However, the debt ceiling has been raised 22 times from 1997 to 2022. Concessions sought by the new Republican House majority have led to concerns that Congress could have trouble raising the debt ceiling before June. The Looming Default Deadline Secretary Yellen's early June deadline is an educated guess at best. Billions of dollars go in and out of the Treasury coffer daily. While many variables affect the government balance sheet, the biggest unknown is: How much will the government receive by April 15th? I think that the government default is closer than it appears, as Uncle Sam may get a smaller tax revenue this year. Please hear me out. The market capitalization of the entire US stock market is estimated at $40.5 trillion at year-end 2022, down $11.7 trillion or -22.5% from a year ago. An average investor might have lost 20% or more in her stock portfolio last year. A rational investor would sell the losing stocks at the year end to claim tax loss. Let me illustrate this with an example: Sherri put $10,000 each in 10 stocks in January 2022. By December, five of the stocks gained 10% on average, and the other five lost 30%. She decided to keep all the winners and sell all the losers at year end. This allows Sherri to record capital loss of $15,000 (=50,000x30%). Scenario 1 If Sherri made a taxable income of $80,000, without taking into account of capital loss, her tax bill would be $4,807 plus 22% of the amount over $41,775. $4,807 + ($80,000 - $41,775) * 22% = $13,216 Scenario 2 If Sherri claims all the capital loss in one year from her annual taxable income, her new tax bill will be $9,916, a reduction of $3,300. $4,807 + ($80,000 - $15,000 - $41,775) * 22% = $9,916 If more and more investors are doing the same thing, Uncle Sam may find a short fall in personal tax income in the tune of hundreds of billions of dollars. The prospect of corporate income tax revenue is not much rosier. US companies were met by high inflation, high labor cost, high energy bill and higher borrowing cost last year. All would hit the bottom-line, resulting a smaller tax bill. Game Theory: An Analytical Framework This dark picture may actually bring in opportunities for event-driven trading strategies. First, we could use a Game Theory Matrix to analyze the situation. In summary: • Republicans and Democrats each have two options: to fight or to talk ; • If they fight hard and are not willing to compromise, the debt ceiling could not be raised, and the US would default on its debt obligations; • If one party compromises first, it will bring the other party to the negotiation table; • If both parties are engaged in serious talk, they may reach a compromise and an agreement on a new debt limit; • There will be many rounds of negotiations. The talk may not necessarily be successful. It could break down at the end, leading to a default. In my opinion, a US default is no longer unthinkable. The Republicans have good reasons to carry through their threats if they could not get the compromises they seek for. After all, the blame will mainly fall on to the Biden Administration. If a US default is what it takes to bring the country back to fiscal responsibility, so be it. Event-Driven Strategies Taking the 2011 S&P downgrade as a guide, a US default could push T-bonds up and global stock markets down. Euro and Pound could depreciate against the dollar. In retrospect, I found that the rounds of fight and talk offer more trading opportunities. Each move could send shocks and ripples through the financial systems. In Long Strangle options strategy on CBOT Wheat last June, we recognized that the Russia-Ukraine conflict moved the wheat market with battleground actions, not one time but by multiple actions. CBOT 10-Year T-Note (ZN), CME E-Mini S&P 500 (ES) and CME Euro FX (6E) are possible instruments to apply this strategy. When the odds of default and new debt ceiling are both reasonably large, Strangle Options may be applicable. I would consider setting up out-of-the-money calls and OTM puts on the June futures contracts in March. It works the same way on either ZN, ES or 6E. Debt ceiling negotiations will pick up pace after the April 15th tax date. I expect a lot of market-moving breaking news in April and May. When you hold both calls and puts, you may find that regardless of whether the negotiations advance or break down, one of your positions will gain in value. Happy trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
Editors' picks
5
We're Hiring In Japan!Hey Japanese speakers! 👋 We’re hiring! As the largest social network and charting platform for traders and investors – used by 30 million users each month in over 170 different countries (and with Japan near the top of the list) – we’re looking for teammates in Japan who are passionate about markets to help us grow. If you’re a TradingView expert, based in Japan, can speak English and Japanese, and also have experience in social networks, this is the perfect position for you. Keep reading to learn about who we're looking for and how you can apply. Job focus: We're looking for a Community Manager based in Japan to amplify all that we do. You love creating cool content about financial markets, sharing on social media, and helping others understand how our platform works so they can make better decisions. You want to teach others about markets, learn more about markets, and share the TradingView brand across the web. Key responsibilities: -Manage our social media channels in Japan, including our TradingView account on TradingView, Twitter , Line, Youtube, and more! -Work with influencers and key partners to help us grow our reach and make sure they are using TradingView to the best of their ability. -Bring engaged user feedback to the team so we can improve our platform. -Explore ways of reaching new audiences who have yet to learn about TradingView, like live video, ideas, chats, webinars, events, and co-branded content. -Conduct regular data analysis and reporting to show the team your progress over time. You have: -An interest in trading and investing, with a deep understanding of how TradingView works. -A passion for social media, content, and working with influencers. -A love for meeting new people and helping others to make sure they have the best experience possible. -Fluency in English and Japanese -1+ years experience working with digital communities whether it’s social media, email, partnerships, and/or customer support. -Experience working in a fast moving, collaborative environment, with respect to both projects and content creation. If you’re interested in this role, please apply by commenting below. Remember we are looking for candidates who speak both English and Japanese! We will use your TradingView profile as a starting point to see if you're the perfect candidate, and then reach out with a private message. Keep in mind that we are always looking for talented team members . So if we don't reach out to you right away, stay patient, and down the road we can connect once again. Thanks for being a member of TradingView and we look forward to meeting everyone!
Editors' picks
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Big Four Macro: Bonds Part 2In last week’s macro outlook post we covered the outlook for intermediate and long bond yields. The analysis concluded that the long term technical trend has changed from lower to flat/neutral but that more work (i.e., a higher low) is needed to definitively turn the macro trend higher. That piece is linked below in the related idea section. 10 Year Yield Weekly: After peaking at 4.34% in October, 10s have declined into the first confluence of support. The confluence is defined by 2 channel bottoms, the fibonocci retracement of the last wave higher, an internal trend line (not shown and slightly violated) across the 3.04% - 3.25% highs and the last violated pivot @ 3.25%. Additionally, the move from 4.34% has covered about 100 basis points, consistent with the last two primary corrections. This is the markets first solid opportunity since the October high to test meaningful support. Either, it bases here for a move back toward the 4.34% October high or fails and cuts much deeper, perhaps as far as the .382% retracement (2.86%) of the entire structural bear market. If the market does successfully base, the nature of the move should offer significant insight into the balance of the year. Early in my career I was obsessed with Elliott. But after years of effort, I wasn't able to develop it as a reliable trading methodology. However, those years led me to believe that markets do often move in three and five wave sequences. But if I can't immediately identify an obvious primary sequence with a quick glance, then a count isn't reliable enough to use. Even then it is only useful only for context and then only in conjunction with a broader understanding of price volume relationships and trend. Bond yields appear to have completed a clear five wave move from the March 2020 low to the October 2022 high, leaving them vulnerable to correction and suggesting an intermediate high that should hold for several months. 10 Year Ultra Futures Daily: When a weekly chart is resting at an important juncture, I like to drop down to the daily chart in order to assess the likely hood of it holding or failing. For this view, in order to assess volume I switch from yield to price. Ultras are into a zone of strong daily perspective resistance defined by the confluence of the .50% retracement of the 122-21 - 113-15 decline, the December 2022 high, volume profile, and the June 2022 pivot low @ 121-19. It is also taking more volume to produce gains, suggesting that supply is becoming more aggressive as the market moves higher. Three drives to a high (see linked related ideas) and the failed breakout above the 122-18 pivot all increase the odds of the resistance holding. A show of weakness that destroys the uptrend would strongly suggest a completed test and set the stage for a broader pullback. Seasonal Tendency (US30Y Futures): Bond prices have very strong seasonal tendencies. They tend to set important intermediate highs early in the year before declining into mid-year. Conclusions: The monthly/macro trend has changed from lower to neutral, but yields need to make a higher low before definitively making the case that the new trend is higher. The weekly chart is testing a solid support confluence. The outcome of that test should help define the markets behavior over the next 3-4 months. The weekly correction that began at the October high does not look complete. The daily perspective rally that began last October is faltering. Signs of supply are developing and reliable seasonal tendencies are turning negative (yield up/price down). When combined with a strong confluence of weekly support there is a good chance that yields will begin to move back toward their October highs. The characteristics of that rally will be important in determining if it is simply a test of the October high that eventually leads to a much deeper retracement (2.50% or so) or the beginning of a new leg higher. A failure to hold the support confluence would strongly suggest that a much larger retracement of the two year old bear market was unfolding. Targets for that retracement would fall in the 2.25-.50% zone. Good Trading: Stewart Taylor, CMT Chartered Market Technician Shared content and posted charts are intended to be used for informational and educational purposes only. The CMT Association does not offer, and this information shall not be understood or construed as, financial advice or investment recommendations. The information provided is not a substitute for advice from an investment professional. The CMT Association does not accept liability for any financial loss or damage our audience may incur.
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January 26January 26

The hard part's over

Lowering prices to combat low sales is always a risky strategy. If it backfires, not only have you still got low sales, but you’ve also missed out on substantial revenue – and you’ve got an added bonus in the form of the PR nightmare of having to put prices back up again. Sometimes however, it works. And in the case of Tesla, it looks like it might have been exactly what was needed to kickstart the recovery of its share price.

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TSLA
Tesla shows it still has charge

Tesla’s earnings beat has shown that despite rising electricity prices and lowered demand – EVs are still in.

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AT&T joins in the slump

AT&T joins the rest of the telecommunication sector in bracing for a difficult year ahead.

CELUSD
Celsius planning new token?

A brand new Celsius token could be coming soon – let’s hope it fares better than the last.

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To the clouds and back

Microsoft has released its latest earnings report – and it wasn’t what investors were hoping for.

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Aptos APT price, where to fix profits?Congratulations to all those patient people who bought Aptos for less than $4, according to the idea It is very likely that the APTUSDT price will be able to reach $23, and in an ideal scenario, $29. This is a profit of x4-x6 per month. Even those who bought APT at the very beginning for $10-12 can record a decent profit. There is still potential for growth in the crypto market But remember: you need to take your profits from "the table" in time while the market allows you to do so. In the crypto market, it is enough to use the rule: "Eat the crumbs after "the whales", and you will always be full." _____________________ Did you like our analysis? Leave a comment, like, and follow to get more
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Bitcoin's price action is growing increasingly erraticYesterday, Bitcoin endured a volatile session with an early plunge to $25 000, followed by a rebound to a new high of $23 815. Interestingly, the price action occurred after the U.S. stock market closed and was characteristic of profit-taking, lasting merely a few minutes. This ties to a pattern of wild moves to the upside after the market close or during the weekends when the futures market for Bitcoin is closed, leading to low volumes (and easier manipulation of the price). That raises additional questions about the health of the current rally and makes us stay very cautious and look for signs of weakness, which could suggest a short-term trend reversal. As for our outlook beyond the short-term, we remain bearish and maintain our price targets at $15 000 and $13 000. That is because we continue to foresee institutional problems in the cryptocurrency market, more economic tightening on the level of central banks, and ongoing earnings recession (all weighing on stock and cryptocurrency markets). Furthermore, the current rally matches our description of a bearish case we outlined in its early start (we wanted to see the rising price and declining volume throughout the rally). Illustration 1.01 Illustration 1.01 portrays the 1-minute chart of BTCUSD and the run-up in the price after the U.S. stock market closed yesterday. Illustration 1.02 The picture above shows the 1-minute chart of BTCUSD dating back to the 20th (Friday) and 21st of January 2023. The yellow arrow indicates the U.S. stock market close going into the weekend. Interestingly, during the weekend, price action was livid. Illustration 1.03 The image above shows the 1-minute chart of BTCUSD dating back to the 13th (Friday) and 14th of January 2023. Once again, the price action was very livid during the weekend. Technical analysis Daily time frame = Bullish Weekly time frame = Slightly bullish Illustration 1.04 Illustration 1.04 displays the daily chart of BTCUSD. The red arrow indicates a declining volume accompanying the price increase. Low volume near high price tags continues to hint at fewer buyers willing to buy Bitcoin after such a price rise. The same decline can also be observed across most other exchanges (besides Bitstamp) and in the futures market. Please feel free to express your ideas and thoughts in the comment section. DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.
35
✅ GOLD : 1950$ as the next Target ? Well, as you can see, yesterday, as we expected, after a liquidity gathering, it faced buying pressure and was able to grow to $1938 in the first move, and then faced a correction to $1928, After correcting the price by 100 pips, gold faced growth again and was able to grow up to $1949, now the price is trading in the range of $1936 and if the support of $1931 is maintained, we can expect growth up to $1950 again. ! Follow me for more analysis & Feel free to ask any questions you have, I'm here to help. ⚠️ This Analysis will be updated ... 👤 Arman Shaban : @ArmanShabanTrading 📅 01.26.2022 ⚠️(DYOR) ❤️ If you apperciate my work , Please like and comment , It Keeps me motivated to do better ❤️
Long
11
RLinda ! GOLD -> A rebound from a strong support zone Gold is in consolidation, but this consolidation has the form of an ascending wedge, which is also in an ascending price channel. Strong analysts and large investment figures believe that the gold in the near future could go into a correction phase, after which the growth will continue, but not as active. A "rising wedge" pattern is forming on the chart, which aims at a break-down of the support and making the price fall, but there are no prerequisites at the moment. Earlier (several weeks ago), a similar set-up was formed, but as we see, the price has already tested the multi-month high of 1949.26. The price forms a pullback to the channel support, I expect the retest of the strong zone and a bounce of the price. Our target in this case will be the resistance area of 1945-1950 Regards R.Linda!
Long
15
IMX/USDT Main trend (part)Logarithm. Time frame 3 days. The main trend (part). The idea shows the true highs of pumping $9.3172. From the peak, the price has dropped by -95% (acceptable for such altcoin HYIPs). Minimum $0.376. The price is now $0.72 after working off double bottom targets. The price has gone to an important mirror resistance. Schematically, conventionally, showed the potential movement. It is also worth noting that this cryptocurrency is associated with a gaming HYIP, hence, in addition to the market cycle, the price is significantly affected by the real application of this protocol in the gaming industry. ICO — $0.16. It is worth noting that the ICO took place in November 2021. Price $0.16. This is what the trend looks like on the line chart.
14
The Great StagflationIn this post, I will present a compendium of higher timeframe charts to show why it's likely that the U.S. economy, and likely much of the global economy as well, is heading into a period of stagflation. I have termed this coming period "The Great Stagflation" because I believe this is how the mid-2020s will be characterized in retrospect. The term stagflation refers to a period when economic growth slows or declines, unemployment increases and inflation remains elevated. To listen to my full thoughts on stagflation, and my thoughts on why I believe we're already in a recession, you can watch my video below. Chart 1 - S&P 500 Yearly Chart (SPX) This chart shows a downward oscillation of the Stochastic RSI on the yearly chart of the S&P 500 index (SPX). This degree of strong downward momentum on the yearly chart of SPX is rare and has only occurred just three times in the past 100 years: the Great Depression, the 1970s Stagflation, and the Dotcom Bust. In each case, the stock market stagnated for a period of at least a decade. Chart 1a This chart shows the several important Fibonacci levels on the highest timeframe on the S&P 500 (SPX). What this chart shows is that the market bottom in 2022 was right at the 3rd Fibonacci extension, when using the peak before the Great Depression and the lowest ever price for SPX as our reference point. It's possible that if the stock market falls below the market bottom from 2022 decisively, the next major Fibonacci support on the highest timeframe will be all the way down at the Dotcom peak (or pre-Great Recession peak), which is the 2.618 Fibonacci extension. This price level is highlighted in red. Chart 2 - Producer Price Index (PPIACO) This chart shows the Producer Price Index by Commodity: All Commodities (PPIACO). The Producer Price Index is a measure of the average change in the selling prices received by domestic producers for their output. It is calculated by the Bureau of Labor Statistics (BLS) and is reported on a monthly basis. It covers a wide range of commodities, including those used as inputs for goods, services, and construction, and is grouped into various stages of production, such as raw materials, intermediate goods, and finished goods. The Producer Price Index can be used as a leading indicator of Consumer Price Index (CPI). As we see in this yearly chart, the Stochastic RSI is showing strong upward momentum that is rising up from oversold conditions. This type of upward oscillation can add inflationary pressure for years to come, and can set the stage for stagflation. Chart 3 - Stock Market Deflation vs. Commodity Price Inflation This chart shows the S&P 500 index (SPX) compared against the Producer Price Index by Commodity: All Commodities (PPIACO). During periods of stagflation, the SPX/PPIACO ratio oscillates downward as commodity price inflation causes the Federal Reserve to tighten the money supply to curtail inflation. As a result, the stock market declines as commodity prices inflate. Thus, the yearly chart of the SPX/PPIACO ratio could be sending a warning that what we are dealing with is a period of prolonged stock market stagnation. Chart 4 - Stock Market to the Moon These quarterly (3-month) charts show the entire price history of the U.S. stock market (SPX) dating back to 1871. I applied a log-linear regression channel to give a rough approximation of the extent to which the stock market has deviated from its mean, or average price, over the years. In the fourth quarter of 2021 (Q4 2021), the stock market closed exactly at the +2 standard deviation from its mean price, the highest ever recorded on a quarterly closing basis. The chart on the right side shows a zoomed-in view, which shows how perfectly SPX reached the +2 standard deviation before declining. The mean or average price, which is visualized in the chart as the red line, is so far down, that it does not even appear on the zoomed-in chart. To put the meteoric rise of the stock market during the period of limitless monetary easing into perspective: It has been so extreme that it has actually rendered the extreme bubble of the Roaring '20s, before the Great Depression, as merely being an average stock market valuation. Chart 5 - Supercycle Bearish Divergence This chart ominously shows a major bearish divergence on the yearly chart of the S&P 500 index (SPX). Bearish divergence is when price creates a higher high while the RSI creates a lower high. Bearish divergence can warn of a coming reversal, as it reflects the notion that the bull run is becoming exhausted. Looking back 150 years, such an extreme bearish divergence has actually never occurred before on the yearly chart. This multi-decade bearish divergence could be indicating the start of a new Supercycle, or potentially even the start of a new Grand Supercycle -- one in which the stock market underperforms for years to come, as interest rates, or the cost of money, trends higher. Only time will tell how this will unfold, but this chart provides further evidence that we're likely entering a period that will be characterized by prolonged stock market stagnation. Chart 5a Volume has been declining during the formation of this bearish divergence. Chart 6 - Stock Market Growth vs. GDP Growth This quarterly chart shows Gross Domestic Product (GDP) on the left and the stock market (SPX) on the right. Applied to both charts is a log-linear regression channel. Notice how GDP is barely hanging on to the -2 standard deviation at a time when the stock market has blasted up to the +2 standard deviation. This extreme divergence has been made possible solely by the Federal Reserve's monetary easing experiment. The Federal Reserve has compensated for declining GDP growth by lowering interest rates even faster than GDP growth declines. By doing this, the Federal Reserve has made the cost of money so low that risk assets were able to rally, even as actual increases in productivity did not occur. The extreme divergence of extreme stock market outperformance coupled with extreme GDP growth underperformance is unsustainable, particularly in the face of commodity inflation. The Great Stagflation will likely see stock market returns stagnate, which in turn will more accurately reflect stagnating economic growth. The cycle of boom and bust is largely an inevitable eventuality. Chart 7 - Price of Stocks vs. Price of Bonds In a prior post, I discussed the meaning of this chart. Simply put, this ratio chart compares the price of the S&P 500 Index to the price of a risk-free Treasury bond (defined here as the 10-year U.S. Treasury bond). I applied a log-linear regression channel to illustrate the fact that despite all the tightening that the Federal Reserve has already undertaken, we are only just now at the historical mean for this ratio chart. What I am about to say next is quite dense, but see if you can understand my logic: Since the numerator of this ratio chart (SPX) currently has strong downward Stochastic RSI momentum on its yearly chart (which is depicted in Chart 1 above), and since this ratio chart has strong upward momentum on its yearly chart, then this suggests that the denominator (the price of a 10-year U.S. Treasury bond, written here as the inverse of its yield {1/US10Y}) is likely to head down faster than numerator (SPX) does, thereby allowing the ratio to move up and reach the +2 standard deviation of the regression channel. Since the price of bonds moves inversely to the yield, this ratio chart is ominously warning that the yields on 10-year Treasury bonds may move much higher in the years to come. If Treasury yields are moving higher this is likely because inflation continues to be persistent. Such a tight monetary environment, coupled with persistent inflation, is likely to result in stagflation. To read more on the meaning of this chart, you can view my post below. Chart 7a This chart is similar to the previous, except that real rates are used. With real rates rising so drastically (and therefore bringing down bond prices) as a ratio to the S&P 500, it creates the appearance that the stock market is becoming more and more overvalued, even as it nonetheless sells off! This reflects a massive dislocation in capital. Over time, capital will flow out of the stock market and into less-risky and higher-yielding Treasury bonds, particularly since commodity inflation is unlikely to abate and thus Treasury yields will remain elevated. Chart 8 - The Real Cost of Apple (AAPL) This chart shows the price of Apple's stock (AAPL) compared against the price of a 10-year U.S. Treasury bond. Over the past year, Apple's great balance sheet and high cash flow, has made it seem like a safe haven relative to more speculative risk assets and companies with negative cash flow. Yet, when compared against the actual safe-haven asset (the 10-year U.S. Treasury bond), the premium in Apple's price could not be higher. The price of AAPL for the current yield on a 10-year U.S. Treasury reflects a capital dislocation (the biggest ever). In other words, too much capital is in Apple's stock for the yield on a 10-year U.S. Treasury to be as high as it currently is. An efficient market would cause capital to flow out of Apple's stock and into less-risky and higher-yielding U.S. Treasury bonds over time, especially since persistent inflation is likely to keep Treasury yields higher for longer. Since Apple is a component of many exchange-traded funds (ETFs) and mutual funds, the decline in its value may cause the entire stock market to decline. As unemployment rises, the stream of passive contributions to mutual funds and ETFs will slow and reverse as drawdowns and hardship withdrawals increase. Higher unemployment will also lead to less consumer spending on Apple's products and services causing an earnings recession. Finally, rising geopolitical tensions between the U.S. and China may severely disrupt supply chains. Apple stands to gain little, but lose a lot in the years to come. Chart 9 - High-Yield Corporate Bonds vs. Money Supply The symbol in chart is a bit dense to understand, but upon deciphering it, one can understand that it warns of a coming liquidity crisis for companies with lower credit ratings. First, BAMLH0A0HYM2EY is the symbol for the all-in effective rate of high-yield corporate bonds. This represents the cost of borrowing for companies with lower credit ratings. Second, the denominator is the M2 money supply in the U.S. Finally, the chart is adjusted by an arbitrary multiplier to remove visual distortion. The effective yield that companies (which the market considers to be risky) must pay on their bonds has increased rapidly relative to the supply of money, the latter of which has actually been decreasing at a record pace. This is a liquidity crisis in the making for companies that have low credit ratings and which need constant infusions of new debt to maintain financial viability. If the amount of money needed to finance new debt is increasing at a record pace as the supply of money decreases at a record pace, then the amount of money in the economy available for these companies to earn, so as to be able to finance their debt, will quickly become insufficient as a matter of mathematical certainty. Thus, a liquidity crisis is largely inevitable, particularly since the central bank may not be able to intervene to the extent that would be needed to avert such a crisis without worsening commodity inflation. As we can see in the monthly chart, the EMA ribbon which acted as resistance, has been broken. Even as the Stochastic RSI oscillates down, price is remaining above the EMA ribbon for the first time since the Great Recession. Chart 10 - Persistent Inflation This chart shows just how persistent inflation has been. This ratio chart compares iShares TIPS Bond ETF which tracks an index composed of inflation-protected U.S. Treasury bonds (TIP) to iShares 7-10 Year Treasury Bond ETF (IEF). For the first time ever, the Stochastic RSI (which is shown on the bottom) has oscillated fully down to oversold levels on the monthly chart while price remains above the EMA ribbon. This suggests a major trend change may have occurred in that the EMA ribbon, which has generally held as resistance, may have flipped to support. This leads us to conclude that inflation may be persistently elevated for longer than anticipated. So long as inflation remains high, central banks must keep interest rates, or the cost of money, high as well. Compare the current situation to the Great Recession when inflation quickly turned into deflation, which allowed the central banks to pivot to monetary easing. One might question whether this monthly chart is showing a... bullflag? Chart 11 - Commodity Inflation Supercycle Similar to the previous chart, this chart shows Invesco DB Commodity Index Tracking Fund (DBC). DBC is composed of futures contracts on 14 of the most heavily traded and important physical commodities in the world. Each candlestick in this chart represents a 2-month period. What this chart shows is just how persistent commodity inflation has been. Despite nearly an entire year of monetary tightening at a record pace, commodity futures are only very slowly disinflating. Compare this to the Great Recession, when commodity prices rapidly deflated. This time around it is likely that commodity prices will remain elevated even as economic growth slows. This is occurring because commodity prices have entered into a new supercycle, and this new supercycle of higher commodity prices will likely result in The Great Stagflation. Chart 11a It appears that if anything, DBC is presenting a bull flag pattern on this higher timeframe chart. This could stymie the Federal Reserve's ability to pivot to easier monetary conditions should unemployment begin to rise rapidly or should corporate liquidity issues mount. Chart 12 - Cost of Energy This chart shows the price of American multinational oil and gas corporation, ExxonMobil (XOM). Price has been ripping higher after bouncing on the -2 standard deviation regression channel line during the pandemic shutdown. Now, the yearly Stochastic RSI is showing strong upward momentum. This suggests that the costs of energy, including fossil fuel energy, will trend upward for years to come, even as economic growth slows. Similar patterns as this are appearing across virtually all charts in the energy sector, including in sustainable energy (hydrogen, uranium, etc.). Since energy is considered a commodity, these charts patterns buttress the assertion that commodity prices may continue to inflate in the years to come. In my post below, I note how the hydrogen energy company Plug Power (PLUG) looks to be in a log-scale bull flag pattern. (Not a buy or sell recommendation) Chart 13 - Coffee This chart shows that coffee futures bounced after undergoing a Fibonacci retracement to the 0.618 level. Now, long lower wicks are forming on bullish reversal candles, indicating that prices are likely to attempt a rally on the monthly timeframe. This is yet another warning that commodity inflation may remain persistent. Chart 14 - Eggs This chart, with a seemingly cryptic symbol, shows the price of eggs (specifically, the price of one dozen of large, Grade A eggs) compared against the U.S. money supply (M2). The chart is actually quite ominous, and I'll explain why. The price of eggs is soaring at a record pace even as the supply of money is shrinking at a record pace. For the first time on record, the price of eggs relative to the supply of money has reached a level above the 6-month EMA ribbon, which has historically always acted as resistance. From a conceptual perspective, what this chart actually means is that more of consumers' wealth must go into meeting their basic food needs. Thus, consumers will have less wealth to spend on other goods and services. Since eggs are inferior goods, meaning that one's demand for eggs increases as one's income goes down, the soaring price of eggs may actually be confounded by increasing demand (alongside supply constraints). If demand of these inferior goods increases as unemployment goes up, and eggs remain scarce, the price can soar even higher as the below chart suggests. This chart shows the yearly Stochastic RSI is only now just beginning to oscillate up. This means that the upward pressure on the price of eggs may last for years to come. Of course, eggs are commodities. When commodity prices inflate even as the central bank tightens the money supply, this may result in stagflation. Commodity inflation is a central bank's worst nightmare because it makes it difficult to pivot to easier monetary conditions to stimulate a slowing economy. If a central bank pivots to easier monetary conditions before commodity inflation is mitigated, then commodity prices will not just continue to rise, but they may hyperinflate. Thus, this inflationary spiral in the price of eggs is sending an ominous warning about the coming Great Stagflation. Chart 15 - Money Supply This chart shows that for the first time, when looking back to 1960, the U.S. money supply (M2) actually declined year-over-year. The amount of dollars removed from the money supply in 2022, could carpet the country of Luxembourg and spill into Belgium, Germany and France, or if each dollar were lined up lengthwise, would span the distance from earth to the moon more than 100 times over. Fortunately though, enough dollars still exist within the M2 money supply, that if each dollar was lined up lengthwise, it would reach from earth to past Uranus, the second most distant planet in our solar system. Chart 16 - The Fed's Balance Sheet The chart on the left of the two charts shown above, shows what appears to be the Federal Reserve rapidly rolling off assets off its balance sheet in 2022, and into 2023. However, when put into perspective, as illustrated by the chart on the right, the past year of balance sheet rolloffs barely scratches the surface of the total amount of assets that the Federal Reserve added to its balance sheet over the decades of monetary easing. In the years to come, the global financial system will have to grapple with the consequences of the monetary easing experiment ending. Chart 17 - Dollar Index (DXY) This chart shows what appears to be the U.S. dollar index (DXY) breaking out of a bull flag on this yearly chart. In doing so, it is also breaking out above the resistance of its EMA ribbon, as shown in the chart on the right. On a conceptual level, by tightening the money supply more than the central banks of other countries, the Federal Reserve is effectively exporting inflation to those countries, and averting domestic commodity shortages. Yet, as with everything, there are disadvantages to doing this. Tightening the U.S. money supply too much can cause global liquidity issues since the U.S. dollar is the world's reserve currency and most global debt is denominated in it. Already the Bank for International Settlements (BIS) has warned of dollar liquidity issues in the FX swaps and forwards market. If commodity inflation resurges, and forces the U.S. Federal Reserve to hike more than anticipated, this could cause a global liquidity crisis. Destabilizing the fragile and highly leveraged dollar-denominated global debt and derivatives market could ultimately accelerate the move away from the dollar standard. This Catch-22 is likely to result in a Great Stagflation. Chart 18 - Soaring Risk-Free Rate This chart shows a clear trend break in the yields of 10-year U.S. Treasury bonds. The era of lower and lower interest rates over time is over. In theory, when the interest rate on a bond rises, this occurs because the market perceives greater risks associated with holding that bond. Therefore, the rapid rise in the risk-free rate (10-year U.S. Treasury yield), means that suddenly this risk-free asset is more... risky. Since holding any other asset, except physical cash and physical gold, is considered some degree more risky than holding U.S. Treasury bonds, then all other assets become more risky as well. One would expect this to happen as the monetary easing experiment comes to an end, and the everything bubble deflates. Chart 19 - Extreme Yield Curve Inversion This chart shows the yield curve inversion between the 10-year U.S. Treasury bond and the 3-month U.S. Treasury bill. Just days ago, the inversion slipped to the steepest inversion since the early 1980s. This is often considered a reliable recession indicator because these yields have never inverted without a recession ensuing. Effectively, these yields only invert because the central bank is tightening the money supply. When yields are inverted, bank lending declines because banks can no longer profitably borrow at short term rates to lend at long term rates. Since bank credit creates the most amount of money in a capitalist economy, a yield curve inversion is a warning of impending decline in the money supply, and therefore an impending decline in corporate earnings and consumer spending. Corporations can only earn, and consumers can only spend, some subset of the total money supply. Right now, that warning is blaring the loudest it has in over 40 years. In fact, we've never had such a steep inversion while the global economy is as leveraged as it is. Only time will tell how this will play out, but it's unlikely to end well. Chart 20 - Volatility (VIX) This chart shows the Volatility S&P 500 Index (VIX) in a years-long symmetrical triangle pattern. This triangle pattern will likely end at some point this year, or early next year. Since the yield curve is inverted, this pattern will quite likely end with a breakout. Indeed, the yearly Stochastic RSI momentum for the VIX is upward, as shown in the chart below. Chart 20a As noted above, this chart shows that the yearly Stochastic RSI for the VIX is on a bull run. Chart 21 - Job Openings This chart shows that job openings reached the +2 standard deviation from their mean in early 2022. This was likely not just a business cycle high, but more likely, this was a supercycle high. The U.S. economy is unlikely to achieve such a high amount of job openings again for the foreseeable future. Since GDP growth barely substantiated such a high amount of job openings, one may conclude that this occurred due to excessive economic stimulation that denotes the monetary easing experiment. Chart 22 - Dow Jones Industrial Average Index (DJI) This chart shows that even with the declines in 2022, the Dow Jones Industrial Average Index (DJI) remains at an extremely overbought level. The only other times the DJI has been as overbought as it is now was before the Great Depression and before the Dotcom Bust. Chart 23 - International Stock Markets This yearly chart compares the performance of S&P 500 (SPX) to that of the Deutsche Boerse AG German Stock Index DAX (DEU40). As you can see, it looks like the SPX is set to underperform the DEU40, possibly for years to come. Technically, the DEU40 can outperform the SPX by falling by less than it. Thus, this chart does not speak to absolute performance. Chart 23a This yearly chart compares the performance of S&P 500 (SPX) to that of the NIFTY 50 (NIFTY). The NIFTY is a benchmark Indian stock market index that represents the weighted average of 50 of the largest Indian companies listed on India's National Stock Exchange (NSE). It looks like the NIFTY has formed a years-long bull pennant relative to the S&P 500, and that the former could be ready to outperform its U.S. counterpart for years to come. It seems that in a defragmenting world with rising tensions between global super powers, a largely neutral India could be poised to outperform. So far, India has become a beneficiary of sanctions on Russia in that it has been able to purchase energy at discounted prices from the latter. Discounted energy prices, in a world that is otherwise struggling with commodity inflation, is a unique advantage that may explain why the NIFTY is set to outperform. Cheap energy enables strong economic growth. Chart 24 - Emergence of Bitcoin Let's go on a journey through time to measure just how disruptive the emergence of Bitcoin has become to traditional financial markets. This chart shows that, in just over a decade's time, Bitcoin has generated more wealth for an investor than the S&P 500 has generated in the past 150 years. Of course, such performance is not sustainable, and the returns of Bitcoin will become less and less impulsive with each successive halving cycle, which is mathematically consistent with a log growth curve function. Chart 24a This chart shows that the central bank can use interest rates to deflate the price of risk assets. As Treasury yields rise, risk assets typically decline. This shows that individuals' wealth is controlled by central governments. Chart 25 - Stock Market Decay This chart shows the performance of the U.S. stock market (SPX) compared against the performance of Bitcoin over the past ~15 years. There has never, in the history of the stock market, been an asset class that actually turns the exponential growth of the S&P 500 into a decay function like this. Bitcoin has become too disruptive to traditional financial markets, and is undermining central banks' ability to control individuals' wealth. Thus, central banks are preparing to deal with this problem. The solution will likely be in the form of CBDC which will restrict one's ability to convert fiat currency into decentralized cryptocurrency such as Bitcoin. Yet, CBDC can also result in unprecedented control by central governments of the way in which humans transact. In the coming months, I plan to write a research-based post on Bitcoin, cryptocurrency, and the ways in which blockchain technology and non-fungible tokens (NFTs) will revolutionize the way humans transact, authenticate ownership, and verify originality in a digital space. But for this technology, in a digital world denominated by AI, it will become impossible for humans to distinguish between what is real and what is not. Important Disclaimer Nothing in this post should be considered financial advice. Trading and investing always involve risks and one should carefully review all such risks before making a trade or investment decision. Do not buy or sell any security based on anything in this post. Please consult with a financial advisor before making any financial decisions. This post is for educational purposes only.
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SPX Triangle Will Break Soon but Which Way?Which Way Will the SPX Triangle Break? Consider All the Arguments Ever since the October 2022 lows, the S&P 500 SP:SPX has been consolidating especially when considered on larger time frames like daily and weekly. This consolidation has formed what is known as a triangle pattern (or symmetrical triangle). A triangle is a consolidation pattern that represents equilibrium in the balance between buyers and sellers. The range narrows and price action compresses until the consolidation ends. The Primary Chart above shows the current triangle that has formed. It is essentially a collision between a 3-month uptrend and a 13-month downtrend (lasting over a year since January 2022 highs). So long as price remains in this triangle, uncertainty about the intermediate term direction will likely remain. Many triangles have arisen this year, and each one has led to new lows. This one may as well, as the yield curves and macro data support this outcome. But price could whipsaw out the top of the triangle for a month or two before heading to lows. All possibilities remain on the table. For further discussion on the details of this triangle, please refer to the linked chart and post under Supplementary Chart A below. Supplementary Chart A 1. Arguments for Bear-Market Continuation and Further Declines to New Lows VIX has been trending lower to new lows. But this argument cuts both ways—it lies at multi-year support as well as the support zone for this entire bear market. It’s not a spot to be complacent. On the other hand, VIX could be forming a new seasonal range lower than the past few years. The downtrend in volatility must be respected until it breaks. But the break could be vicious and fast, occurring in a matter of hours / days. For now, VIX keeps failing right at the down TL from early October 2022 peaks. Supplementary Chart B (VIX) Consider the orange-colored down trendline from mid-October 2022 highs. Price continues to fail at that down TL. But price is also in the yellow rectangle, which is the major support / demand zone for volatility over the entire bear market to date. The pink uptrend line is a multi-year uptrend line where VIX has found support since 2017. SPX shows a daily bearish divergence on RSI. But no weekly divergences yet. Stochastics and another indicator (EFI) both show clear divergences on the daily. But sometimes triple divergences form. And sometimes, these divergences are erased with higher price action. Divergence create the conditions for a decline, they don’t guarantee one. And without weekly divergences yet, this minor daily divergence is too weak a signal to take to the bank. As of the December 2022 FOMC meeting, the Fed had not paused and it had not pivoted. In fact, the Fed remained hawkish, communicating a “higher for longer” message to markets. The FOMC’s published SEP (Summary of Economic Projections) showed that rates were forecasted to peak at 5.1% (on average) which was higher than its prior rate forecast of 4.6%. The Fed’s projections also showed that it expected no rate cuts throughout 2023. In other words, higher for longer, even if rate hikes were paused. Will the Fed’s messaging and policy from December 13, 2022, remain steadfast? If so, the markets will likely struggle to find a way higher unless they continue to completely disbelieve the Fed. Note that rate markets (and equity prices) are currently disagreeing with the Fed about rate cuts later this year. That all could change on February 1, 2023. Money supply has continued to shrink. Tom McClellan said to financial media recently that M2SL has been shrinking while GDP has been growing, and this has never happened—the ratio of M2/GDP has never been shrinking this fast. Note that there is a lag b/w M2 changes and the effects on markets. But M2 has been shrinking for a while now. Note that when M2 rises faster than GDP, this can fuel rallies a year later, but this is the opposite of that scenario. However, note that US Treasury Department maneuvering relating to the debt-ceiling crisis could hamper the Fed’s efforts to drain liquidity from markets. Other than its general effect on markets, this maneuvering is well beyond the scope of this article and the author’s knowledge. Consumer spending and corporate profits cannot hold up much longer given the leading economic indicators (PMIs, ISMs, Empire State Manufacturing Index, retail sales reports from December, mortgage applications, and housing data). But equity markets don’t seem convinced. Markets can remain irrational longer than traders can remain solvent. Gold on a ratio chart to SPX (GLD/SPX) is still outperforming. This is not an all-clear signal for equities, especially the blue-chip index of US stocks. Supplementary Chart B (GLD/SPX) Typically, a bear-market bottom / final low does not happen while yield curves remain inverted. One WS analyst stated unequivocally yesterday that 85% of the yield curves are currently inverted. According to that firm's indicators, if more than 55% of the yield curves are inverted, a recession always follows. But when? The timing is the tricky part especially for traders and investors. Bear markets can fool the vast majority. The 3m/10y curve has been inverted to levels not seen since 1981. The inversion has fallen deeper into negative territory than any other inversion on the data available on TradingView’s charts. The final bear-market low typically happens after the Fed has pivoted and cut rates for some time. And remember, when the Fed cuts, it’s not because the economic outlook and corporate earnings are bright. Rather, the Fed cuts because of deteriorated economic conditions, tanking earnings and earnings estimates, horrible employment numbers (a recession). Supplementary Chart C.1 (3m/10y) For further discussion on the 10y/3m yield curve, see the post linked here: Supplementary Chart C.2 Recent PMI data from SP Global was negative economically (US Manufacturing PMI at 46.7 while December was 46.2, and US Services PMI at 46.6 while December was at 44.7) though it moderated somewhat (slightly less negative) from the prior month’s data. “The US economy started 2023 on a disappointingly soft note with business activity contracting sharply again in January. It showed subdued customer demand and impact of high inflation on client spending. January data also indicated a “faster increase in cost burdens at private sector firms. Although well below the average rise seen over the prior two years, the rate of cost inflation quickened from December and was historically elevated.” The commentary by SP Global’s economist provided along with their recent PMI report noted that “not only has the survey indicated a downturn in economic activity at the start of the year, but the rate of input cost inflation as accelerated into the new year, linked in part to upward wage pressures, which could encourage a further aggressive tightening of Fed policy despite rising recession risks.” This suggests that even if inflation has peaked, it may not be heading to the 2% target as fast as it moved down from the peak to the current levels. And it implies that stagflation may be around the corner as economic growth slows but sticky inflation does not dissipate. Major past selloffs in markets have been preceded by a very low unemployment (UE) rate. The rate has been as low as 3.5% recently. One analyst, Eric Johnston at Cantor Fitzgerald, noted that investors would do well by buying markets when the UE rate is 9% to 10%, and selling the market when it reaches extreme lows from 3% to 4%. UE rates haven’t begun to significantly roll over, and the Fed has remained focused on the tight labor markets and services sectors as sources of more sticky inflation. So if PMIs from January are showing wage pressures increasing somewhat, that doesn’t suggest the Fed will be *cutting* rates soon, though a pause may be discussed as rates approach 5%. Taxes as a percentage of GDP are at the level that coincides with recessions. Taxes are 18% of GDP. 2. Arguments for a Rally That Precedes New Bear Market Lows First, a rally that breaks the down trendline does not immediately negate the bear market. The 2000-2002 bear market experienced a substantial multi-month break of its down trendline (complete with a successful backtest after the break) before the next major leg down to new lows occured. Supplementary Chart D (2000-2002 Example) SPX continues to stabilize above major support / resistance zones such as 3900 and 3950. And it has closed above 4000 three consecutive days this week: January 23, 24, and 25. When it meets the down TL, it has not been reacting lower the way it has on every other test of the trendline during this bear market. It’s spending quality time with the TL, which is a new phenomenon / characteristic when price and the TL meet. SPX continues to hold above major anchored VWAPs from August, October, and December 2022, which range from 3850 to 3900. AAPL's price action is fairly bullish in the short-to-intermediate term. Here are the bullish technicals arising on AAPL's chart. AAPL’s daily chart shows a failed breakdown beneath major support levels over the past year. AAPL broke below $134.37 and $129.04 and fell to a new low, but quickly reclaimed $129.04 and $134.37, so this constitutes a failed breakdown. The failed breakdown is visible on the daily chart, so this is supportive of prices for several weeks to a couple months. $134.37 was the level coinciding with the lows from October 13 and November 4, 2022. $129.04 was the June 2022 low, which was undercut in December 2022 and early January 2023. Price broke below all these levels and then immediately reclaimed them. AAPL’s failed breakdown coincided with a tag of the parallel downtrend channel from the all-time high. AAPL shows positive (bullish) divergences with momentum indicators on both the daily and weekly charts. AAPL remains right at or slightly above the down TL from the mid-August 2022 highs, which was a fairly steep 5-month downtrend. AAPL remains above a short-term TL from June lows, but it also remains contained in its downtrend channel from the all-time high. AAPL is in no-man’s land, with some bullish forces that brought it here (divergences and failed breakdowns) Supplementary Chart E.1 (AAPL's Failed Breakdown) Supplementary Chart E.2 (AAPL's Parallel Channel Support) NDX (Nasdaq 100) broke above its down TL (linear chart only) and has held above it as well. It also has been making higher lows since the October 2022 lows. Supplementary Chart F.1 (NDX QQQ Log TL) Supplementary Chart F.2 (NDX QQQ Linear TL) IWM broke above its down TL on both log and linear charts. But it remains at critical resistance at the $188-$192 zone. It remains above intermediate term VWAPs from swing highs and lows in August, October and December 2022 (which are around $180), but it still remains below the VWAP anchored to its all-time high. Supplementary Chart G (IWM Linear TL) HYG broke above its down TL. Like other TL breaks, this could ultimately be a false signal, but here it has persisted for some time. HYG had a breakout above its down TL in the 2007-2009 bear market driven by the great financial crisis. This breakout was a false signal b/c the bear market was not over until early 2009, when the SPX made new lows. HYG resumed a downtrend after breaking above its down TL and went back to lows again and made lower lows, a move that coincided with SPX heading to new lows in Q1 2009. HYG shows a small bearish divergence on RSI on the daily chart. Wait for a larger bearish divergence to form on both daily and weekly charts perhaps. VIX has been trending lower to new lows. But this argument cuts both ways—it lies at multi-year support as well as the support zone for this entire bear market. It’s not a spot to be complacent. On the other hand, VIX could be forming a new seasonal range lower than the past few years. The downtrend must be respected until it breaks. VIX keeps failing right at the down TL from early October 2022 peaks. Consumer spending and corporate profits cannot hold up much longer given the leading economic indicators (PMIs, ISMs, Empire State Manufacturing Index, retail sales reports from December, mortgage applications, and housing data). But equity markets don’t seem convinced. Markets can remain irrational longer than traders can remain solvent. Earnings at major publicly traded companies may not be deteriorating quickly enough to disprove the “soft-landing” narrative that pervades markets. Recession does not mean stocks go straight to lows when yield curves have inverted. Recessions take time to unfold, just as the damage to economies takes time when rates are restrictive. There is a lag. Both FTSE and DAX have taken out the highs from mid-December 2022. FTSE is approaching multi-year highs. Both have broken above down TLs from the bear market. Both have decisively reclaimed 200-day SMAs. Both have been forming higher highs and lows Multi-week bear-traps occur frequently where significant down trendlines are broken until the bear market resumes in earnings in a period of several weeks or months. The 2000-2002 bear market provides an excellent example of this. So a break to the upside in the triangle pattern on SPX may last for several weeks or even months before the real downside move begins. Just because it’s been challenging and choppy does not mean it won’t get worse and more trappy. The third year of a presidential term (US markets) is nearly always bullish. There have been exceptions according to Tom McClellan (technical expert citing 1939 as an exception to this rule but noting that Hitler’s army was marching across Poland at the time). Some have said that the most bullish quarter of the presidential cycle is Q1 of the third year (technical expert Mark Newton speaking to financial media on January 24, 2022). Breadth has been strong lately, and some technical analysts have cited “breadth-thrust” indicators as giving bullish signals. Markets continue to disbelieve the Federal Reserve. Consider the differential b/w the Fed’s forecasts and the rate markets forecasts about whether rate cuts will happen this year, and where the terminal rate will be. So even if the Fed remains hawkish at the next meetings, perhaps it won’t matter. Markets will do what they want to do, including "fighting the Fed." You don't have to fight the Fed though or any other central bank. But don't fight the trend either. The Fed’s messaging at the February 1, 2023 FOMC presser may be slightly more dovish, or it may be interpreted as dovish if Powell so much as mentions a pause in hikes, or that the FOMC is discussing a pause. Even if Powell remains hawkish, sometimes markets can interpret the Fed Chair’s statements (sometimes ambiguous) the wrong way—recall that this happened at the July FOMC in 2022, after which Powell cleared up the confusion at Jackson Hole in August 2022 (tanking markets immediately). Equity positioning remains fairly underweight US equities according to financial experts on this subject. This could lead to momentum chase higher to trap all the bears before the real decline gets underway. Maybe stocks continue higher until two things occur: EPS estimates fall further, employment numbers start getting quite ugly, and the Fed is not as accomodative as it has been in past economic recessions (because while inflation has peaked, it may not fall directly to the 2% target, and with easing financial conditions, perhaps inflation could stop falling rise in Q1 2023) Equal-weighted S&P 500 (RSP) has broken above its down TL on a daily close as of January 25, 2023. The offense-defense ratio (consumer discretionary divided by consumer stables) RCD/RHS shows a breakout in this ratio above 8-month highs in the ratio’s value. This potentially signals near-term strength in equity markets as offensive stocks (consumer discretionary) outperform stocks defensive names (consumer staples) ________________________________________ Author's Comment: Thank you for reviewing this post and considering its charts and analysis. The author welcomes comments, discussion and debate (respectfully presented) in the comment section. Shared charts are especially helpful to support any opposing or alternative view. This article is intended to present an unbiased, technical view of the security or tradable risk asset discussed. Please note further that this technical-analysis viewpoint is short-term in nature. This is not a trade recommendation but a technical-analysis overview and commentary with levels to watch for the near term. This technical-analysis viewpoint could change at a moment's notice should price move beyond a level of invalidation. Further, proper risk-management techniques are vital to trading success. And countertrend or mean-reversion trading, e.g., trading a rally in a bear market, is lower probability and is tricky and challenging even for the most experienced traders. DISCLAIMER: This post contains commentary published solely for educational and informational purposes. This post's content (and any content available through links in this post) and its views do not constitute financial advice or an investment or trading recommendation, and they do not account for readers' personal financial circumstances, or their investing or trading objectives, time frame, and risk tolerance. Readers should perform their own due diligence, and consult a qualified financial adviser or other investment / financial professional before entering any trade, investment or other transaction.
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CVD - Cumulative Volume Delta (Chart)█   OVERVIEW This indicator displays cumulative ​volume delta (​CVD) as an on-chart oscillator. It uses intrabar analysis to obtain more precise ​volume delta information compared to methods that only use the chart's timeframe. The core concepts in this script come from our first ​ CVD indicator , which displays CVD​ values as plot candles in a separate indicator pane. In this script, CV​D values are scaled according to price ranges and represented on the main chart pane. █   CONCEPTS Bar polarity Bar polarity refers to the position of the close price relative to the open price. In other words, bar polarity is the direction of price change. Intrabars Intrabars are chart bars at a lower timeframe than the chart's. Each 1H chart bar of a 24x7 market will, for example, usually contain 60 bars at the lower timeframe of 1min, provided there was market activity during each minute of the hour. Mining information from intrabars can be useful in that it offers traders visibility on the activity inside a chart bar. Lower timeframes (LTFs) A lower timeframe is a timeframe that is smaller than the chart's timeframe. This script utilizes a LTF to analyze intrabars, or price changes within a chart bar. The lower the ​LTF, the more intrabars are analyzed, but the less chart bars can display information due to the limited number of intrabars that can be analyzed. Volume delta Volume delta is a measure that separates ​volume​ into "up" and "down" parts, then takes the difference to estimate the net demand for the asset. This approach gives traders a more detailed insight when analyzing volume​ and market sentiment. There are several methods for determining whether an asset's volume​ belongs in the "up" or "down" category. Some indicators, such as On Balance Volume​ and the Klinger Oscillator , use the change in price between bars to assign ​volume​ values to the appropriate category. Others, such as Chaikin Money Flow , make assumptions based on open, high, low, and close prices. The most accurate method involves using tick data to determine whether each transaction occurred at the bid or ask price and assigning the ​volume​ value to the appropriate category accordingly. However, this method requires a large amount of data on historical bars, which can limit the historical depth of charts and the number of symbols for which tick data is available. In the context where historical tick data is not yet available on TradingView, intrabar analysis is the most precise technique to calculate ​volume delta on historical bars on our charts. This indicator uses intrabar analysis to achieve a compromise between simplicity and accuracy in calculating ​volume delta on historical bars. Our Volume Profile indicators use it as well. Other ​volume delta indicators in our Community Scripts , such as the Realtime 5D Profile , use real-time chart updates to achieve more precise ​volume delta calculations. However, these indicators aren't suitable for analyzing historical bars since they only work for real-time analysis. This is the logic we use to assign intrabar ​volume to the "up" or "down" category:  • If the intrabar's open and close values are different, their relative position is used.  • If the intrabar's open and close values are the same, the difference between the intrabar's close and the previous intrabar's close is used.  • As a last resort, when there is no movement during an intrabar and it closes at the same price as the previous intrabar, the last known polarity is used. Once all intrabars comprising a chart bar are analyzed, we calculate the net difference between "up" and "down" intrabar volume​ to produce the volume​ delta for the chart bar. █   FEATURES CVD resets The "cumulative" part of the indicator's name stems from the fact that calculations accumulate during a period of time. By periodically resetting the volume​ delta accumulation, we can analyze the progression of ​volume delta across manageable chunks, which is often more useful than looking at ​volume delta accumulated from the beginning of a chart's history. You can configure the reset period using the "CVD Resets" input, which offers the following selections:  • None : Calculations do not reset.  • On a fixed higher timeframe : Calculations reset on the higher timeframe you select in the "Fixed higher timeframe" field.  • At a fixed time that you specify.  • At the beginning of the regular session .  • On trend changes : Calculations reset on the direction change of either the Aroon indicator, Parabolic SAR , or Supertrend .  • On a stepped higher timeframe : Calculations reset on a higher timeframe automatically stepped using the chart's timeframe and following these rules: Chart TF ​HTF < 1min 1H < 3H 1D <= 12H 1W < 1W 1M >= 1W 1Y Specifying intrabar precision Ten options are included in the script to control the number of intrabars used per chart bar for calculations. The greater the number of intrabars per chart bar, the fewer chart bars can be analyzed. The first five options allow users to specify the approximate amount of chart bars to be covered:  • Least Precise (Most chart bars) : Covers all chart bars by dividing the current timeframe by four.   This ensures the highest level of intrabar precision while achieving complete coverage for the dataset.  • Less Precise (Some chart bars) & More Precise (Less chart bars) : These options calculate a stepped ​LTF in relation to the current chart's timeframe.  • Very precise (2min intrabars) : Uses the second highest quantity of intrabars possible with the 2min ​LTF.  • Most precise (1min intrabars) : Uses the maximum quantity of intrabars possible with the 1min ​LTF. The stepped lower timeframe for "Less Precise" and "More Precise" options is calculated from the current chart's timeframe as follows: Chart Timeframe Lower Timeframe Less Precise More Precise < 1hr 1min 1min < 1D 15min 1min < 1W ​2hr​ 30min > 1W 1D 60min The last five options allow users to specify an approximate fixed number of intrabars to analyze per chart bar. The available choices are 12, 24, 50, 100, and 250. The script will calculate the LTF​ which most closely approximates the specified number of intrabars per chart bar. Keep in mind that due to factors such as the length of a ticker's sessions and rounding of the LTF​, it is not always possible to produce the exact number specified. However, the script will do its best to get as close to the value as possible. As there is a limit to the number of intrabars that can be analyzed by a script, a tradeoff occurs between the number of intrabars analyzed per chart bar and the chart bars for which calculations are possible. Display This script displays raw or cumulative volume​ delta values on the chart as either line or histogram oscillator zones scaled according to the price chart, allowing traders to visualize volume​ activity on each bar or cumulatively over time. The indicator's background shows where CVD​ resets occur, demarcating the beginning of new zones. The vertical axis of each oscillator zone is scaled relative to the one with the highest price range, and the oscillator values are scaled relative to the highest volume​ delta. A vertical offset is applied to each oscillator zone so that the highest oscillator value aligns with the lowest price. This method ensures an accurate, intuitive visual comparison of volume​ activity within zones, as the scale is consistent across the chart, and oscillator values sit below prices. The vertical scale of oscillator zones can be adjusted using the "Zone Height" input in the script settings. This script displays labels at the highest and lowest oscillator values in each zone, which can be enabled using the "Hi/Lo Labels" input in the "Visuals" section of the script settings. Additionally, the oscillator's value on a chart bar is displayed as a tooltip when a user hovers over the bar, which can be enabled using the "Value Tooltips" input. Divergences occur when the polarity of ​volume delta does not match that of the chart bar. The script displays divergences as bar colors and background colors that can be enabled using the "Color bars on divergences" and "Color background on divergences" inputs. An information box in the lower-left corner of the indicator displays the HTF used for resets, the ​LTF used for intrabars, the average quantity of intrabars per chart bar, and the number of chart bars for which there is LTF data. This is enabled using the "Show information box" input in the "Visuals" section of the script settings. FOR Pine Script™ CODERS  • This script utilizes `ltf()` and `ltfStats()` from the lower_tf library.   The `ltf()` function determines the appropriate lower timeframe from the selected calculation mode and chart timeframe, and returns it in a format that can be used with request.security_lower_tf() .   The `ltfStats()` function, on the other hand, is used to compute and display statistical information about the lower timeframe in an information box.  • The script utilizes display.data_window and display.status_line to restrict the display of certain plots.   These new built-ins allow coders to fine-tune where a script’s plot values are displayed.  • The newly added session.isfirstbar_regular built-in allows for resetting the ​CVD segments at the start of the regular session.  • The VisibleChart library developed by our resident PineCoders team leverages the chart.left_visible_bar_time and chart.right_visible_bar_time variables to optimize the performance of this script.   These variables identify the opening time of the leftmost and rightmost visible bars on the chart, allowing the script to recalculate and draw objects only within the range of visible bars as the user scrolls.   This functionality also enables the scaling of the oscillator zones.   These variables are just a couple of the many new built-ins available in the chart.* namespace.   For more information, check out this blog post or look them up by typing "chart." in the Pine Script™ Reference Manual .  • Our ta library has undergone significant updates recently, including the incorporation of the `aroon()` indicator used as a method for resetting ​CVD segments within this script.   Revisit the library to see more of the newly added content! Look first. Then leap.
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Pine Script™ indicator
15
Smart Money Concepts [LUX]This all-in-one indicator displays real-time market structure (internal & swing BOS / CHoCH), order blocks, premium & discount zones, equal highs & lows, and much more...allowing traders to automatically mark up their charts with widely used price action methodologies. Following the release of our Fair Value Gap script, we received numerous requests from our community to release more features in the same category. "Smart Money Concepts" (SMC) is a fairly new yet widely used term amongst price action traders looking to more accurately navigate liquidity & find more optimal points of interest in the market. Trying to determine where institutional market participants have orders placed (buy or sell side liquidity) can be a very reasonable approach to finding more practical entries & exits based on price action. The indicator includes alerts for the presence of swing structures and many other relevant conditions. Features This indicator includes many features relevant to SMC, these are highlighted below: Full internal & swing market structure labeling in real-time Break of Structure (BOS) Change of Character (CHoCH) Order Blocks (bullish & bearish) Equal Highs & Lows Fair Value Gap Detection Previous Highs & Lows Premium & Discount Zones as a range Options to style the indicator to more easily display these concepts Settings Mode: Allows the user to select Historical (default) or Present, which displays only recent data on the chart. Style: Allows the user to select different styling for the entire indicator between Colored (default) and Monochrome. Color Candles: Plots candles based on the internal & swing structures from within the indicator on the chart. Internal Structure: Displays the internal structure labels & dashed lines to represent them. (BOS & CHoCH). Confluence Filter: Filter non-significant internal structure breakouts. Swing Structure: Displays the swing structure labels & solid lines on the chart (larger BOS & CHoCH labels). Swing Points: Displays swing points labels on chart such as HH, HL, LH, LL. Internal Order Blocks: Enables Internal Order Blocks & allows the user to select how many most recent Internal Order Blocks appear on the chart. Swing Order Blocks: Enables Swing Order Blocks & allows the user to select how many most recent Swing Order Blocks appear on the chart. Equal Highs & Lows: Displays EQH/EQL labels on chart for detecting equal highs & lows. Bars Confirmation: Allows the user to select how many bars are needed to confirm an EQH/EQL symbol on chart. Fair Value Gaps: Displays boxes to highlight imbalance areas on the chart. Auto Threshold: Filter out non-significant fair value gaps. Timeframe: Allows the user to select the timeframe for the Fair Value Gap detection. Extend FVG: Allows the user to choose how many bars to extend the Fair Value Gap boxes on the chart. Highs & Lows MTF: Allows the user to display previous highs & lows from daily, weekly, & monthly timeframes as significant levels. Premium/Discount Zones: Allows the user to display Premium, Discount, and Equilibrium zones on the chart Usage Users can see automatic CHoCH and BOS labels to highlight breakouts of market structure, which allows to determine the market trend. In the chart below we can see the internal structure which displays more frequent labels within larger structures. We can also see equal highs & lows (EQH/EQL) labels plotted alongside the internal structure to frequently give indications of potential reversals. In the chart below we can see the swing market structure labels. These are also labeled as BOS and CHoCH but with a solid line & larger text to show larger market structure breakouts & trend reversals. Users can be mindful of these larger structure labels while trading internal structures as displayed in the previous chart. Order blocks highlight areas where institutional market participants open positions, one can use order blocks to determine confirmation entries or potential targets as we can expect there is a large amount of liquidity at these order blocks. In the chart below we can see 2 potential trade setups with confirmation entries. The path outlined in red would be a potential short entry targeting the blue order block below, and the path outlined in green would be a potential long entry, targeting the red order blocks above. As we can see in the chart below, the bullish confirmation entry played out in this scenario with the green path outlined in hindsight. As price breaks though the order blocks above, the indicator will consider them mitigated causing them to disappear, and as per the logic of these order blocks they will always display 5 (by default) on the chart so we can now see more actionable levels. The Smart Money Concepts indicator has many other features and here we can see how they can also help a user find potential levels for price action trading. In the screenshot below we can see a trade setup using the Previous Monthly High, Strong High, and a Swing Order Block as a stop loss. Accompanied by the Premium from the Discount/Premium zones feature being used as a potential entry. A potential take profit level for this trade setup that a user could easily identify would be the 50% mark labeled with the Fair Value Gap & the Equilibrium all displayed automatically by the indicator. Conclusion This indicator highlights all relevant components of Smart Money Concepts which can be a very useful interpretation of market structure, liquidity, & more simply put, price action. The term was coined & popularized primarily within the forex community & by ICT while making its way to become a part of many traders' analysis. These concepts, with or without this indicator do not guarantee a trader to be trading within the presence of institutional or "bank-level" liquidity, there is no supporting data regarding the validity of these teachings.
Pine Script™ indicator
401
Dynamic Linear Regression ChannelsPlots new linear regression channels from points where a previous channel is broken thus keeping the length of bars in the trend dynamic. Regression channels are useful in detecting trend changes, support and resistance levels and to trade mean reversions. Note: Setting higher values of upper and lower deviation may result in error if the price never breaks the channel and the script references too many bars than supported.
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Pine Script™ indicator
34
Harmonic Patterns Based Trend FollowerEarlier this week, published an idea on how harmonic patterns can be used for trend following. This script is an attempt to implement the same. 🎲 Process 🎯 Derive Zigzag and scan harmonic patterns for last 5 confirmed pivots 🎯 If a pattern is found, highest point of pattern will become the bullish zone and lower point of the pattern will become bearish zone. 🎯 Since it is trend following method, when price reaches bullish zone, then the trend is considered as bullish and when price reaches bearish zone, the trend is considered as bearish. 🎯 If price does not touch both regions, then trend remains unchanged. 🎯 Bullish and bearish zone will change as and when new patterns are formed. 🎲 Note Patterns are not created on latest pivot as last pivot will be unconfirmed and moving. Due to this, patterns appear after certain delay - patterns will not be real time. But, this is expected and does not impact the overall process. When new pattern formed When price breaks over the zones 🎲 Output 🎯 Patterns formed are drawn in blue coloured lines. Due to pine limitation of max 500 lines, older patterns automatically get deleted when new ones come. 🎯 Bullish Zone and Bearish Zone are plotted in green and red colours and the zone will change whenever new pattern comes along. 🎯 Bar colors are changed according to calculated trend. Trend value can be 1 or -1 based on the current trend. You can also find the value in data window. 🎯 For simplicity purpose, input option for selection of specific patterns are not provided and also pattern names are not displayed on the chart.
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Pine Script™ indicator
26
Musashi_Fractal_Dimension === Musashi-Fractal-Dimension === This tool is part of my research on the fractal nature of the markets and understanding the relation between fractal dimension and chaos theory. To take full advantage of this indicator, you need to incorporate some principles and concepts: - Traditional Technical Analysis is linear and Euclidean, which makes very difficult its modeling. - Linear techniques cannot quantify non-linear behavior - Is it possible to measure accurately a wave or the surface of a mountain with a simple ruler? - Fractals quantify what Euclidean Geometry can’t, they measure chaos, as they identify order in apparent randomness. - Remember: Chaos is order disguised as randomness. - Chaos is the study of unstable aperiodic behavior in deterministic non-linear dynamic systems - Order and randomness can coexist, allowing predictability. - There is a reason why Fractal Dimension was invented, we had no way of measuring fractal-based structures. - Benoit Mandelbrot used to explain it by asking: How do we measure the coast of Great Britain? - An easy way of getting the need of a dimension in between is looking at the Koch snowflake. - Market prices tend to seek natural levels of ranges of balance. These levels can be described as attractors and are determinant. Fractal Dimension Index ('FDI') Determines the persistence or anti-persistence of a market. - A persistent market follows a market trend. An anti-persistent market results in substantial volatility around the trend (with a low r2), and is more vulnerable to price reversals - An easy way to see this is to think that fractal dimension measures what is in between mainstream dimensions. These are: - One dimension: a line - Two dimensions: a square - Three dimensions: a cube. --> This will hint you that at certain moment, if the market has a Fractal Dimension of 1.25 (which is low), the market is behaving more “line-like”, while if the market has a high Fractal Dimension, it could be interpreted as “square-like”. - 'FDI' is trend agnostic, which means that doesn't consider trend. This makes it super useful as gives you clean information about the market without trying to include trend stuff. Question: If we have a game where you must choose between two options. 1. a horizontal line 2. a vertical line. Each iteration a Horizontal Line or a Square will appear as continuation of a figure. If it that iteration shows a square and you bet vertical you win, same as if it is horizontal and it is a line. - Wouldn’t be useful to know that Fractal dimension is 1.8? This will hint square. In the markets you can use 'FD' to filter mean-reversal signals like Bollinger bands, stochastics, Regular RSI divergences, etc. - Wouldn’t be useful to know that Fractal dimension is 1.2? This will hint Line. In the markets you can use 'FD' to confirm trend following strategies like Moving averages, MACD, Hidden RSI divergences. Calculation method: Fractal dimension is obtained from the ‘hurst exponent’. 'FDI' = 2 - 'Hurst Exponent' Musashi version of the Classic 'OG' Fractal Dimension Index ('FDI') - By default, you get 3 fast 'FDI's (11,12,13) + 1 Slow 'FDI' (21), their interaction gives useful information. - Fast 'FDI' cross will give you gray or red dots while Slow 'FDI' cross with the slowest of the fast 'FDI's will give white and orange dots. This are great to early spot trend beginnings or trend ends. - A baseline (purple) is also provided, this is calculated using a 21 period Bollinger bands with 1.618 'SD', once calculated, you just take midpoint, this is the 'TDI's (Traders Dynamic Index) way. The indicator will print purple dots when Slow 'FDI' and baseline crosses, I see them as Short-Term cycle changes. - Negative slope 'FDI' means trending asset. - Positive most of the times hints correction, but if it got overextended it might hint a rocket-shot. TDI Ranges: - 'FDI' between 1.0≤ 'FDI' ≤1.4 will confirm trend following continuation signals. - 'FDI' between 1.6≥ 'FDI' ≥2.0 will confirm reversal signals. - 'FDI' == 1.5 hints a random unpredictable market. Fractal Attractors - As you must know, fractals tend orbit certain spots, this are named Attractors, this happens with any fractal behavior. The market of course also shows them, in form of Support & Resistance, Supply Demand, etc. It’s obvious they are there, but now we understand that they’re not linear, as the market is fractal, so simple trendline might not be the best tool to model this. - I’ve noticed that when the Musashi version of the 'FDI' indicator start making a cluster of multicolor dots, this end up being an attractor, I tend to draw a rectangle as that area as price tend to come back (I still researching here). Extra useful stuff - Momentum / speed: Included by checking RSI Study in the indicator properties. This will add two RSI’s (9 and a 7 periods) plus a baseline calculated same way as explained for 'FDI'. This gives accurate short-term trends. It also includes RSI divergences (regular and hidden), deactivate with a simple check in the RSI section of the properties. - BBWP (Bollinger Bands with Percentile): Efficient way of visualizing volatility as the percentile of Bollinger bands expansion. This line varies color from Iced blue when low volatility and magma red when high. By default, comes with the High vols deactivated for better view of 'FDI' and RSI while all studies are included. DDWP is trend agnostic, just like 'FDI', which make it very clean at providing information. - Ultra Slow 'FDI': I noticed that while using BBWP and RSI, the indicator gets overcrowded, so there is the possibility of adding only one 'FDI' + its baseline. Final Note: I’ve shown you few ways of using this indicator, please backtest before using in real trading. As you know trading is more about risk and trade management than the strategy used. This still a work in progress, I really hope you find value out of it. I use it combination with a tool named “Musashi_Katana” (also found in TradingView). Best! Musashi
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Pine Script™ indicator
24
Hurst Diamond Notation PivotsThis is a fairly simple indicator for diamond notation of past hi/lo pivot points, a common method in Hurst analysis. The diamonds mark the troughs/peaks of each cycle. They are offset by their lookback and thus will not 'paint' until after they happen so anticipate accordingly. Practically, traders can use the average length of past pivot periods to forecast future pivot periods in time🔮. For example, if the average/dominant number of bars in an 80-bar pivot point period/cycle is 76, then a trader might forecast that the next pivot could occur 76-ish bars after the last confirmed pivot. The numbers/labels on the y-axis display the cycle length used for pivot detection. This indicator doesn't repaint, but it has a lot of lag; Please use it for forecasting instead of entry signals. This indicator scans for new pivots in the form of a rainbow line and circle; once the hi/lo has happened and the lookback has passed then the pivot will be plotted. The rainbow color per wavelength theme seems to be authentic to Hurst (or modern Hurst software) and has been included as a default.
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Pine Script™ indicator
17
RedK K-MACD : a MACD with some more musclesMoving Averages are probably the most commonly used analysis tools, and MACD is possibly the first charting indicator a trader gets to learn about. MACD Basic concept ---------------------------- Without repeating all the tons of documentation about what MACD does, let's quickly re-visit the MACD concept from a 10-mile altitude (note we're keen on simplifying here rather than being technically accurate - so please forgive the use of any "common lingos") - MACD goal is to represent the distance between 2 Moving Averages (MAs) - one fast and one slow, relatively - as an unrestricted zero-based oscillator. - The value of the main MACD line is the distance, or the displacement between the 2 MA's - usually a signal line is used (which is another MA of that distance value) to enable better visualization of the change (and rate of change, since this is all depicted on a time axis) of that displacement - this represents price momentum (price movement in the recent period versus movements for a relatively longer period). - the difference between the main MACD line and its signal is then represented as a histogram above and below the zero line. in this case, that histogram is really redundant, since it shows a value that is already represented visually by the main line and its signal line. How K-MACD is different --------------------------------- K-MACD takes that simple concept of the classic MACD and expands around it - the idea is to use the same simple approach to representing price momentum while bringing in more insight to price moves in the short, medium and long terms, ability to represent more than 2 MA's and to enable better identification of tradeable patterns (like Volatility Contraction and others) - while still keeping things simple and visually clean. K-MACD is an indicator that allows us to view how price moves against 3 moving averages: a fast / slow pair, and a "market" Filter or Baseline (very long) that will be used as a flag for Bear/Bull market mode. Many traders and trading literature use the 200 day (40 week) SMA as that key filter so in total, there are 4 MA lines in K-MACD (excluding the "orange" signal line): * Price Proxy: Which is a very fast moving average that will represent the price itself - let's use a WMA(3) or something close to that here - there will be a signal line to enable better visualization of this similar to a classic MACD - that's the orange line * Fast & Slow MA's : Use whatever represents the "medium term" momentum for your trading - Some traders use 20 and 50, others use 10 and 20 .. if on your price chart, you keep using a pair of MA's for this, use the same settings in K-MACD - these will be represented by the 3-color Momentum Bars that fluctuate above and below the baseline * Filter/Baseline MA: Should be your long (Bullish/Bearish Mode) MA. so 100 or 200 or any other value you consider your market to be bearish below and bullish above. on K-MACD this is actually the blue zero line - everything else is "relative" to it Review the sample chart which explains various elements and the "price chart" setup that K-MACD represents. With K-MACD you can clean up your chart from those various Moving Averages - or use a different set than the ones you already have K-MACD represent - or other indicators (like ATR channels..etc) Other "muscles" in the K-MACD --------------------------------------------- - Relative vs Classic Calculation Mode A key issue with the classic MACD is that the displacement between the 2 moving averages is represented as "absolute or direct" values - as the price of the underlying increases with time, you can't really use these values to make useful comparison between the past and now (see below example) - also you can't use them to compare 2 different instruments. - The "Relative" calculation option in K-MACD addresses that issue by relating all "distances" to the Baseline MA as percentage (above or below) - you can see this clear when you look at the above chart the far left versus the far right and compare K-MACD with the classic MACD - the Classic option is still available - More MA "type" options for all MA lines: choose between SMA, EMA, WMA, and RSS_WMA (which i use a lot in my trading and is my default for the Price Proxy) - More Alerts: a total or 9 alerts (in 3 groups) are available with K-MACD (Momentum above or below baseline, Price Proxy crossing signal line, and Price Proxy crossing baseline) - New 52 week High / Low markers: These will show as Green/red circles on the zero line in K-MACD. this will only work for 1D timeframe and above, i'm just using a simple approach and would like to keep it that way. - i know i added some more features not covered above :) -- if you have questions about any of the settings, feel free to ask below Closing thoughts ------------------------- K-MACD is a combination of couple of indicators i published in the past (xMACD and Mo_Bars) - so you can go back and read about them if needed - I then added improvements to accommodate ideas from swing trading literature and common practices that i plan to focus on in future. So K-MACD is really part of my own trading setup. I assume here that most traders are familiar with what a MACD is - so kept this post short - if you thing we should expand more about the concepts covered here let me know in the comments - i can make some separate posts with examples and more details. I hope many fellow traders find this work useful - and feel free let me know in comments below if you do.
Pine Script™ indicator
11
Multi-timeframe Harmonic PatternsHello friends. In recent months I have been busy with my academic research and haven't had much time to publish new scripts. To fill the gap of these months, I decided to publish the indicator Multi-timeframe Harmonic Patterns . Harmonic technical chart patterns can predict the next price trend and provide traders with clues to the price direction, which is one of the indicators widely used by professional traders. (1) Indicator description This indicator is built on ZigZag Multi Time Frame with Fibonacci Retracement@LonesomeTheBlue . Thanks to LonesomeTheBlue for contributing the awesome indicator The indicator supports 6 different timeframes , and 25 different harmonic patterns This indicator supports indicating key indicator prices: entry price, stop loss price, and two take profit prices (2) Key parameters timeframe resolution: The timeframe of the harmonic pattern pivot high/low source: Calculation method of high/low pivot points timeframe pivot period: Minimum period of high/low pivot points delay for confirmations: Wait for N candles to confirm the chart pattern bullish/bearish colors: Bullish/bearish pattern colors enable harmonic patterns: Enable current harmonic patterns show harmonic patterns: Show harmonic patterns found show trading prices of patterns: Show key prices of harmonic patterns (3) Supported Patterns: Gartlay Cypher Bat Deepcrab Crab Butterfly Shark 0-5 AB=CD 3-Drives Anti-Gartlay Anti-Cypher Anti-Bat Anti-Crab Anti-Butterfly Anti-Shark Black-Swan White-Swan Descending-Triangle Ascending-Triangle Symmetrical-Triangle Headers&Shoulders Inverse-Headers&Shoulders Double-Top Double-Bottom ———————————————————————————————————————— 各位朋友大家好。最近几个月我忙于自己的学术研究没有过多时间更新脚本。为弥补这几个月的空缺，我决定发布该 多时间周期的谐波指标 。谐波技术图表形态在一定程度上可以预测下一个价格走势，为交易者提供价格方向的线索，是广大专业交易人员广泛使用的指标之一。 (1) 指标说明 该指标建立于 ZigZag Multi Time Frame with Fibonacci Retracement@LonesomeTheBlue ，感谢LonesomeTheBlue贡献的出色指标 该指标支持 6种不同的时间周期 ，以及 25种不同的谐波形态 该指标支持指示关键的指标价格：入场价格、止损价格、以及两种止盈价格 (2) 关键参数 timeframe resolution: 谐波形态的时间周期 pivot high/low source: 高/低枢纽点的计算方式 timeframe pivot period: 高/低枢纽点的最小周期 delay for confirmations: 等待N个蜡烛以确认图表形态 bullish/bearish colors: 看涨/看跌的形态颜色 enable harmonic patterns: 使能当前的谐波形态 show harmonic patterns: 显示被发现的谐波形态 show trading prices of patterns: 显示谐波形态的关键价格 (3) 支持形态: Gartlay Cypher Bat Deepcrab Crab Butterfly Shark 0-5 AB=CD 3-Drives Anti-Gartlay Anti-Cypher Anti-Bat Anti-Crab Anti-Butterfly Anti-Shark Black-Swan White-Swan Descending-Triangle Ascending-Triangle Symmetrical-Triangle Headers&Shoulders Inverse-Headers&Shoulders Double-Top Double-Bottom
Pine Script™ indicator
18
Machine Learning: Lorentzian Classification█ OVERVIEW A Lorentzian Distance Classifier (LDC) is a Machine Learning classification algorithm capable of categorizing historical data from a multi-dimensional feature space. This indicator demonstrates how Lorentzian Classification can also be used to predict the direction of future price movements when used as the distance metric for a novel implementation of an Approximate Nearest Neighbors (ANN) algorithm. █ BACKGROUND In physics, Lorentzian space is perhaps best known for its role in describing the curvature of space-time in Einstein's theory of General Relativity (2). Interestingly, however, this abstract concept from theoretical physics also has tangible real-world applications in trading. Recently, it was hypothesized that Lorentzian space was also well-suited for analyzing time-series data (4), (5). This hypothesis has been supported by several empirical studies that demonstrate that Lorentzian distance is more robust to outliers and noise than the more commonly used Euclidean distance (1), (3), (6). Furthermore, Lorentzian distance was also shown to outperform dozens of other highly regarded distance metrics, including Manhattan distance, Bhattacharyya similarity, and Cosine similarity (1), (3). Outside of Dynamic Time Warping based approaches, which are unfortunately too computationally intensive for PineScript at this time, the Lorentzian Distance metric consistently scores the highest mean accuracy over a wide variety of time series data sets (1). Euclidean distance is commonly used as the default distance metric for NN-based search algorithms, but it may not always be the best choice when dealing with financial market data. This is because financial market data can be significantly impacted by proximity to major world events such as FOMC Meetings and Black Swan events. This event-based distortion of market data can be framed as similar to the gravitational warping caused by a massive object on the space-time continuum. For financial markets, the analogous continuum that experiences warping can be referred to as "price-time". Below is a side-by-side comparison of how neighborhoods of similar historical points appear in three-dimensional Euclidean Space and Lorentzian Space: This figure demonstrates how Lorentzian space can better accommodate the warping of price-time since the Lorentzian distance function compresses the Euclidean neighborhood in such a way that the new neighborhood distribution in Lorentzian space tends to cluster around each of the major feature axes in addition to the origin itself. This means that, even though some nearest neighbors will be the same regardless of the distance metric used, Lorentzian space will also allow for the consideration of historical points that would otherwise never be considered with a Euclidean distance metric. Intuitively, the advantage inherent in the Lorentzian distance metric makes sense. For example, it is logical that the price action that occurs in the hours after Chairman Powell finishes delivering a speech would resemble at least some of the previous times when he finished delivering a speech. This may be true regardless of other factors, such as whether or not the market was overbought or oversold at the time or if the macro conditions were more bullish or bearish overall. These historical reference points are extremely valuable for predictive models, yet the Euclidean distance metric would miss these neighbors entirely, often in favor of irrelevant data points from the day before the event. By using Lorentzian distance as a metric, the ML model is instead able to consider the warping of price-time caused by the event and, ultimately, transcend the temporal bias imposed on it by the time series. For more information on the implementation details of the Approximate Nearest Neighbors (ANN) algorithm used in this indicator, please refer to the detailed comments in the source code. █ HOW TO USE Below is an explanatory breakdown of the different parts of this indicator as it appears in the interface: Below is an explanation of the different settings for this indicator: General Settings: Source - This has a default value of "hlc3" and is used to control the input data source. Neighbors Count - This has a default value of 8, a minimum value of 1, a maximum value of 100, and a step of 1. It is used to control the number of neighbors to consider. Max Bars Back - This has a default value of 2000. Feature Count - This has a default value of 5, a minimum value of 2, and a maximum value of 5. It controls the number of features to use for ML predictions. Color Compression - This has a default value of 1, a minimum value of 1, and a maximum value of 10. It is used to control the compression factor for adjusting the intensity of the color scale. Show Exits - This has a default value of false. It controls whether to show the exit threshold on the chart. Use Dynamic Exits - This has a default value of false. It is used to control whether to attempt to let profits ride by dynamically adjusting the exit threshold based on kernel regression. Feature Engineering Settings: Note: The Feature Engineering section is for fine-tuning the features used for ML predictions. The default values are optimized for the 4H to 12H timeframes for most charts, but they should also work reasonably well for other timeframes. By default, the model can support features that accept two parameters (Parameter A and Parameter B, respectively). Even though there are only 4 features provided by default, the same feature with different settings counts as two separate features. If the feature only accepts one parameter, then the second parameter will default to EMA-based smoothing with a default value of 1. These features represent the most effective combination I have encountered in my testing, but additional features may be added as additional options in the future. Feature 1 - This has a default value of "RSI" and options are: "RSI", "WT", "CCI", "ADX". Feature 2 - This has a default value of "WT" and options are: "RSI", "WT", "CCI", "ADX". Feature 3 - This has a default value of "CCI" and options are: "RSI", "WT", "CCI", "ADX". Feature 4 - This has a default value of "ADX" and options are: "RSI", "WT", "CCI", "ADX". Feature 5 - This has a default value of "RSI" and options are: "RSI", "WT", "CCI", "ADX". Filters Settings: Use Volatility Filter - This has a default value of true. It is used to control whether to use the volatility filter. Use Regime Filter - This has a default value of true. It is used to control whether to use the trend detection filter. Use ADX Filter - This has a default value of false. It is used to control whether to use the ADX filter. Regime Threshold - This has a default value of -0.1, a minimum value of -10, a maximum value of 10, and a step of 0.1. It is used to control the Regime Detection filter for detecting Trending/Ranging markets. ADX Threshold - This has a default value of 20, a minimum value of 0, a maximum value of 100, and a step of 1. It is used to control the threshold for detecting Trending/Ranging markets. Kernel Regression Settings: Trade with Kernel - This has a default value of true. It is used to control whether to trade with the kernel. Show Kernel Estimate - This has a default value of true. It is used to control whether to show the kernel estimate. Lookback Window - This has a default value of 8 and a minimum value of 3. It is used to control the number of bars used for the estimation. Recommended range: 3-50 Relative Weighting - This has a default value of 8 and a step size of 0.25. It is used to control the relative weighting of time frames. Recommended range: 0.25-25 Start Regression at Bar - This has a default value of 25. It is used to control the bar index on which to start regression. Recommended range: 0-25 Display Settings: Show Bar Colors - This has a default value of true. It is used to control whether to show the bar colors. Show Bar Prediction Values - This has a default value of true. It controls whether to show the ML model's evaluation of each bar as an integer. Use ATR Offset - This has a default value of false. It controls whether to use the ATR offset instead of the bar prediction offset. Bar Prediction Offset - This has a default value of 0 and a minimum value of 0. It is used to control the offset of the bar predictions as a percentage from the bar high or close. Backtesting Settings: Show Backtest Results - This has a default value of true. It is used to control whether to display the win rate of the given configuration. █ WORKS CITED (1) R. Giusti and G. E. A. P. A. Batista, "An Empirical Comparison of Dissimilarity Measures for Time Series Classification," 2013 Brazilian Conference on Intelligent Systems, Oct. 2013, DOI: 10.1109/bracis.2013.22. (2) Y. Kerimbekov, H. Ş. Bilge, and H. H. Uğurlu, "The use of Lorentzian distance metric in classification problems," Pattern Recognition Letters, vol. 84, 170–176, Dec. 2016, DOI: 10.1016/j.patrec.2016.09.006. (3) A. Bagnall, A. Bostrom, J. Large, and J. Lines, "The Great Time Series Classification Bake Off: An Experimental Evaluation of Recently Proposed Algorithms." ResearchGate, Feb. 04, 2016. (4) H. Ş. Bilge, Yerzhan Kerimbekov, and Hasan Hüseyin Uğurlu, "A new classification method by using Lorentzian distance metric," ResearchGate, Sep. 02, 2015. (5) Y. Kerimbekov and H. Şakir Bilge, "Lorentzian Distance Classifier for Multiple Features," Proceedings of the 6th International Conference on Pattern Recognition Applications and Methods, 2017, DOI: 10.5220/0006197004930501. (6) V. Surya Prasath et al., "Effects of Distance Measure Choice on KNN Classifier Performance - A Review." . █ ACKNOWLEDGEMENTS @veryfid - For many invaluable insights, discussions, and advice that helped to shape this project. @capissimo - For open sourcing his interesting ideas regarding various KNN implementations in PineScript, several of which helped inspire my original undertaking of this project. @RikkiTavi - For many invaluable physics-related conversations and for his helping me develop a mechanism for visualizing various distance algorithms in 3D using JavaScript @jlaurel - For invaluable literature recommendations that helped me to understand the underlying subject matter of this project. @annutara - For help in beta-testing this indicator and for sharing many helpful ideas and insights early on in its development. @jasontaylor7 - For helping to beta-test this indicator and for many helpful conversations that helped to shape my backtesting workflow @meddymarkusvanhala - For helping to beta-test this indicator @dlbnext - For incredibly detailed backtesting testing of this indicator and for sharing numerous ideas on how the user experience could be improved.
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Pine Script™ indicator
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Pearl Dynamics | DR | IDR | AutoTraderThis script is based on the teaching of the @TheMas7er DR | IDR concepts. The purpose of this script is to provide a MTF visualization of all the available data to make informed decision on the trades. The script also will contain entry models which can be used alongside the DR|IDR levels to enter trade and in future also integrate with broker to execute the trades automatically. This script has the following features :- 1) Plots the ADR | ODR | RDR Session ranges 2) The ADR | ODR ranges can be expanded into the RDR Session 3) The previous RDR session can be expanded until the next RDR Session 4) Auto PLOT regular FIB Retracement levels or Plot the .5 STD levels 5) Muli timeframe FVG for 5m/15m/1h timeframes 6) Multi timeframe VIBs|GIBs|GAPs on Current | 5m | 15m| 1h | Daily timeframes 7) Higher timeFrame BSL | SLL based on 15m | 1h | 4h | Daily timeframes with adjustable look-back periods. STRATEGY MODELS 1A) LONG/SHORT Entries based on the 5m Bullish / Bearish FVGs, The entry model has 4 candle pattern types for entry and they will be highlighted when the trade is taken for visualization With the above model has generated 550% profit based on the 1 year backtest results on long and short setups in the RDR session. // Future Work. The following models will be release in the course of the next week. // MODEL2 // ADR Middle Rejections // MODEL3 // ADR Low Rejections // MODEL4 // ADR High Rejections // MODEL5 // ODR Middle Rejections // MODEL6 // ODR Low Rejections // MODEL7 // ODR High Rejections // MODEL8 // VIB REJECTION PATTERNS MULTI CANDLE PATTERNS. // MODEL9 // LONG/SHOT Entries During the ADR | ODR | RDR formation before confirmation bias which are advanced entries. // Enable ADR AND ODR Sessions for Entry and Exit Models. ALERTS // Presently MODEL1A strategy alerts can be used, in the subsequent release there will be alerts added for all key price action movements. AUTOMATION // Integration will be added to send signals to Brokers like Tradovate and other brokers to Fully Automate the trade entries. Credits :- - This would not have been possible with the teaching of @TheMas7er and @ICT_Concepts, without there knowledge this would not have been possible. - PineCoders for providing the amazing library of PineCoders/VisibleChart/4 Note :- Although the Indicator will work in any timeframe from data projection standpoint, the Entry / Exit Models have been tested only for the 5m timeframe. Lower timeframes and Other timeframe optimizations will follow as we go along.
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Educational ideas

Fitting patterns to your bias? I saw a post in twitter which marked a particular converging triangle on BTCUSDT chart on 4H timeframe (As shown below) and implying more bearishness ahead. But, is it really correct analysis? Risk of drawing patterns manually is that we can fit any pattern to price action based on our bias. To overcome this, we need to follow a standard method to draw patterns on chart. Below is my algorithm for drawing patterns. Draw zigzag on chart Find and draw a trend line joining 2 or more pivot lows where price has not breached the trend line towards downside. Find and draw a trend line joining 2 or more pivot highs where price has not breached the trend line towards upside. While drawing, trend lines can touch the pivot candle at any point. But, candles should not lie outside trend line. Take fake outs into consideration to make minor adjustments. At least one among the above trend line should join 3 or more pivots. Another one can have just two pivots. Do you see clear pattern after following these steps? If yes, then you found your pattern and also a skill to define them objectively without bias.
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Education
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DOUBLE BOTTOMHello everyone! It's time to repeat the most popular patterns in trading. One of these patterns is a DOUBLE BOTTOM. Forming There are several factors that you should pay attention to. First, a new minimum appears. This breakthrough is accompanied by increased volumes. Such volumes are fixed by the indicator at this point, because there were a lot of stop orders here and the market absorbed them. After this breakdown, the price begins a correction. Nowhere without correction. The correction is usually made to the breakout level, which used to be support, and now is resistance. Having reached the level, the price turns down again. And here is an important point. If this breakdown is strong, then the price should go to update the lows further. In theory, you can open short positions in the rebound area in the hope of continuing the trend. Then we see the formation of the second bottom. One of the main factors that the price will not fall further is the declining volumes. This is a divergence. From this we understand that forces are shifting to the other side and the trend may change. In addition, we see that the price could not gain a foothold below the first bottom, which tells us about the weakness of sellers. results A double bottom is often found on the chart and serves as a signal for closing short positions and possibly opening long positions. With a proper understanding of this pattern, you can get a lot of profit from trading. The main thing is not to forget to monitor volumes, divergence and candlesticks that indicate the strength or weakness of the trend. Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Education
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💵THE WORLD IN DEBT💵 ☑️The fact that the whole world is in massive Debt that can not be repaid is a buzzphrase that was around for like 20 years already. 20 years passed and nothing bad has happened, so what to worry about? In fact an entire political and economic movement called MMT or a modern monetary theory emerged claiming that government debt does not matter and that we can, you guessed it, print as much as we need(kinda) ☑️But the size of the debt itself was never really and issue so long as the government or a big company could service the debts. That is if their cashflow was positive enough to cover the interest payments on the debt. Now however, as the FED is raising rates, this is an issue. ☑️And its not the USA who’s pile of debt we need to be worried about(they are borrowing in the currency they can print themselves, remember?) but rather the rest of the world and the companies. The majority of developing countries don’t have the internal capital required for development, so they need to borrow on the international financial markets in Dollars. And these counties are now facing a perfect storm of a higher cost of new borrowings in Dollars, lower revenues from foreign trade due to recession(and yes we are in a recession, Wake up) and the massive energy and food costs due to the war in Ukraine and the problems caused by the supply chain crisis. ☑️Most big public companies aren’t doing great either. The share of listed companies with the debt servicing costs higher than the profits is now more than 25% and if we exclude the accounting and financial engineering shenanigans, it is save to say that this share is close to 30%. ☑️So the third of the economy is outright insolvent. Multiple countries will either default soon or will at least be plunge into civil and economic unrest and go the way of Sri-Lanka, Pakistan and others… And Jerome Powell said that he aint stopping and that the Fed funds rate should go up by at least 2 percentage points more. So instead of the collapse of the USA, we are likely to see a chain reaction debt crisis In the rest of the world unless the FED changes its mind… I Hope you guys learned something new today✅ Wish you all Best Of Luck👍 😇And may the odds be always in your favor😇 Do you like this post? Do you want more articles like that?
Education
5
🔥WHAT IS NEEDED FOR BITCOIN TO GROW HIGHER? 1300%vs4900%🚀🔥Hi friends! A lot of newbies consider these things as something bad. These make them very unhappy and disappointed because their position gets the loss. These things are the pullbacks or corrections after significant growth. Everyone is waiting for it now to buy more cheap crypto. 📊 The pullback is the price fall after significant growth. But why is it so good for price growth: 🔥 1. it makes the market (BTC as well) much healthier because it liquidates overleverage traders. For example, -40% pullback liquidates all traders with 1.5x leverage and coll down the market (as it was in the 2016-2017 bull market). 🔥 2. it gives the opportunity to enter the long traders for the advanced traders. If we have 5-6 pullbacks every time after 100-150% growth, you can use already earned money in new trades (increase the risk per trade). When the price doesn't make the pullbacks and you enter the trade at the very beginning of the bull market, you have no chance to exit the trade and use the margin from the profit to increase the risk per trade. ✅ COMPARISON OF 2016-2017 AND 2020-2021 🚩 2016-2017 BULL MARKET The market had made 4900% of profit in just 2 years. I mention 6 huge dumps with 30-40% drawdowns. These dumps cool down the market and liquidate overleveraged traders. Lots of entrance opportunities. Hope the next bull market will be the same. Of course, you can say that market was not as big as now and I agree with you. But the whole BTC capitalization is equal to 3.5% of the entire gold cap, so it's just the beginning for crypto. 🚩2020-2021 BULL MARKET This bull market as well as the 2019 local bull market was almost with no pullbacks and entrance possibilities. Bitcoin had made just +1300% in 2 years. Just 3 pullbacks with +16-30%. Almost no liquidations and no cool down of the market. Not the best growth as the result. In that bull market, the beginners can't even normally use their gaining margin to open new trades. 🔥 WHAT WILL HAPPEN IN THE NEXT BULL MARKET? I think that this growth will be the same as at the last bull market. Of course, it will be some surprises as at each bull market, but it will grow nonstop. I make a huge update about this in the last idea. Check it if you want to know what to expect from BTC and the crypto market here👇 🚩Traders, what is your expectation about BTC bull market? Do you agree with me or have another argument? Write it in the comments! 💻Friends, press the "boost"🚀 button, write comments and share with your friends - it will be the best THANK YOU. P.S. Personally, I open an entry if the price shows it according to my strategy. Always do your analysis before making a trade.
Education
7
Why patience is sometimes the best trading strategy.I recently did a video to highlight the key levels to watch on the S+P. There is a convergence of resistance at 4017/83 (this is the location of the one-year downtrend, the 55-week ma and nearby resistance). I explained that success or failure at this key zone would be critical for direction over the next few months and this zone should go on your radar. I was accused of sitting on the fence and not giving a view. That was actually deliberate, for while I acknowledge that the overall trend is down and in theory ‘the trend is your friend’ and the market should fail here… there are 2 things on the chart which are nagging at me. The first is that despite a plethora of resistance this market is not backing away and the second is that I have a buy signal on the DMI indicator (admittedly the ADX is NOT above 25 so it is not a decent buy signal) BUT the +DI remains stubbornly above the -DI…..mmm…sometimes your best friend is actually your gut, or for me, 35 years of looking at charts gives me enough reason just to be cautious. So, at current levels there is not enough reason to cut out any long-term short positions (the downtrend and resistance remains intact after all) BUT I also cannot jump up and down and say this is a good buy either (as I say that pesky resistance remains) so from my point of view the safest way to trade is to sit tight until the chart gives you another signal. Call this sitting on the fence if you must, but sometimes the best trade is just patience. Disclaimer: The information posted on Trading View is for informative purposes and is not intended to constitute advice in any form, including but not limited to investment, accounting, tax, legal or regulatory advice. The information therefore has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient. Opinions expressed are our current opinions as of the date appearing on Trading View only. All illustrations, forecasts or hypothetical data are for illustrative purposes only. The Society of Technical Analysts Ltd does not make representation that the information provided is appropriate for use in all jurisdictions or by all Investors or other potential Investors. Parties are therefore responsible for compliance with applicable local laws and regulations. The Society of Technical Analysts will not be held liable for any loss or damage resulting directly or indirectly from the use of any information on this site.
Education
Change in the state of deliveryA break in the market structure is a strong signal. Especially if it comes from a higher timeframe level, but how could you know that a new low will not come? You need to see a change in the state of the delivery. For a CSD, first look at Time, then Delivery. An example of a CSD is a price-fully filled fair value gap. On the charts, you can see that gap was not fully filled so the BOS is low prob.' Yes by waiting for the gap to be closed you can miss the entry at the bottom but look at this example You can enter aggressively on the reversal or wait for the gap to be fully filled and enter on the second order block. Which is actually a continuation entry and these are higher probability. hope this helps good luck Dave FX Hutner
Education
1
Cant wait for price to stop ranging? Do thisFirst of all you are going to need this indicator Its the Heiken Ashi Algo Oscillator. Click the image below There are times when price is ranging. When this happens you simply need to see what is the channel where the RSI values are hitting and you want to know WHEN is the RSI breaking out of that channel In this oscillator the HIGH and LOW part of the RSI Range is the +10 and -10 If price is ranging in between as it is consolidating you dont want to sit there for several hours. So in this video you can see how to set an alert telling you when the RSI breaks out of the RANGE. This way, once the alert is set, you can go live life......... See you next time at the CoffeeShop
Education
1
Tips to identify potential trendsTo identify potential trends with ichimoku you need to look at 5 lines: -Tenkan sen:Tenkan sen is higher than kijun sen in an uptrend and vice versa -Kijun sen :Kijun sen is higher than kumo clouds in an uptrend and vice versa, if the price is lower than kijun sen, the market is no longer a potential trend. -Kumo:The kumo shape is very important, it shows the long term momentum of the market, if the kumo is thin and small then the trend is easy to retrace, if the kumo is wide and long it is a stable trend. -Chiko span:It is one of the most important lines but everyone ignores it, it shows the current momentum of the market, if the chiko span crosses with the candle then the market is in range because the momentum is at zero. Example with Xauusd: -Chiko span on candle -Price above kijun sen -Kumo is wide and thick ->So now Xauusd is trending up potential !
Education
HOW IT WORKS: RSI (Relative Strength Index) IndicatorThe RSI is a popular momentum indicator used in technical analysis. It was originally developed by a mechanical engineer turned technical analyst J. Welles Wilder Jr. It was first published in a 1978 book, “New Concepts in Technical Trading Systems” and in Commodities Magazine (Futures magazine) in June’s 1978 issue. Today the RSI is one of the most popular indicators used to measure the speed and change of price movements. In other words, it measures the strength of its trend direction (up, down and sideways) on any market by monitoring the changes in its closing price. THE MAKE UP The RSI is a line graph that moves between two extremes… On the vertical axis (Y-Axis) the RSI line moves up and down in a range between 0 and 100. NOTE: As the indicator is between a range, it is considered a closed indicator. On the horizontal axis (X-Axis), the RSI line moves to the right which is plotted as time. NOTE: You can choose your own time frame i.e. days, hours, minutes etc… For all you technical boffins… If you want to know how the RSI is calculated, I’ve saved this at the end of the article. As a trader you won’t need to worry about the maths at all. Three trading signals you’ll use with the RSI 1. Overbought and Oversold levels 2. Patterns and Trend lines 3. Bullish and Bearish Divergences Trading signal 1: Overbought and Oversold levels When we see the market’s price move up, this means the buyers are outweighing the sellers. And the more higher closing prices we see, on a market, the higher the RSI line moves… When we see the market’s price drop, this means the sellers outweigh the buyers. And the more lower closing prices we see, on a given market, the lower the RSI line moves… However… If the buying continues at an unsustainable rate, the RSI will reach a point that traders call OVERBOUGHT (top heavy). This is where we could start to expect the price to drop from these levels and for the market to enter into a correction (dip). If the selling volume continues at an unsustainable rate, the RSI will reach a point that traders call OVERSOLD (undervalued). This is where we could start to expect the price to turn up from these levels and for the market to enter into a recovery (upside). Now that you understand overbought and oversold terms, let’s explain what I mean with the RSI chart. Overbought RSI: 70 (Sell opportunity) When you see the RSI line touch or cross above 70 (Red horizontal line), this is considered an overbought situation. At this point, traders may start to anticipate that the rising trend is about to end. Traders may then start to prepare to sell and short their positions, as they believe the market’s price has run up too much. If the market then turns down and starts to drop in price, the RSI line will drop below 70 and head back to equilibrium at 50 (Black horizontal line). Oversold RSI: 30 (Buy opportunity) When you see the RSI line touch or cross below 30 (Green horizontal line), this is considered an oversold situation. At this point, traders may start to anticipate that the falling trend is about to end. Traders may then start to buy (go long) their positions, as they believe the market’s price has dropped too much. If the market then turns up from the 30 mark and starts to rise in price, the RSI line will move back to equilibrium at 50 (Black horizontal line). Trading signal #2: Trend lines & Patterns The second way to spot buying and selling trade ideas is with trend lines and patterns. Uptrend confirmation To confirm the strength of the market’s uptrend, you should be able to draw a support (floor level) under the high low RSI prices. And when the RSI breaks below the support line, it could signal the end of the uptrend and a start to the next bear market. Downtrend confirmation To confirm the strength of the market’s downtrend, you should be able to draw a resistance (ceiling level) over the lower RSI high prices. And when the RSI breaks above the resistance line, it could signal the end of the downtrend and a start to the next bull market. These are great confirmation and reversal trading signals to use with your strategy. NOTE: You can also base your buy or sell ideas on trading chart patterns… Trading signal #3: Bullish & Bearish Divergence The third signal I use to spot trade opportunities with the RSI is looking at the market’s price VERSUS the RSI’s direction. In short… BEARISH DIVERGENCE – Warning for downside If the markets price makes higher lows, while the RSI makes lower highs – it’s a warning for DOWNSIDE to come. BULLISH DIVERGENCE – Sign for upside If the markets price makes lower highs, while the RSI makes higher lows – it’s a signal for UPSIDE to come. Either way with both bullish and bearish divergences, the RSI fails to accept the current market’s price movements. And so it is making a probability prediction that soon the market will make a reversal in its current trend. Ok so now you know how the RSI works. Let’s sum up what we learnt. RSI Summary in 3 Trading Signs: Trading signal #1: Overbought & Oversold levels Overbought zone X > 70 = Selling opportunity Neutral zone: X = 50 Oversold zone X < 30 = Buying opportunity Trading signal #2: Trend lines & Chart patterns Uptrend confirmation: RSI makes higher lows (draw support line) Downtrend confirmation: RSI makes lower highs (draw resistance line) Breakout confirmation: RSI breaks out of a chart pattern Trading signal #3: Bullish & Bearish Divergence Bullish divergence: Market’s price – lower highs RSI – higher lows Bearish divergence: Market’s price – higher lows RSI – lower highs Here’s how to calculate the RSI The most common (default) settings for the RSI is 14 (Which we’ll use)) There is a two-part calculation with the RSI. Part 1: Calculate the RSI (step 1) RS or Relative Strength is (Average Gain ÷ Average Loss) Average Gain = (Sum of gains over the past 14 periods) ÷ 14 Average Goss = (Sum of losses over the past 14 periods) ÷14 Calculate the RSI (Step 1) Part 2: Calculate the RSI (Step 2) Once you have this result, we then smoothen the RSI result with part 2… And so that’s how the RSI continues with each closing price of the time frame you choose. Trade well, live free. Timon (Financial trader since 2003)
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Video ideas

SYSCOIN: Don't Miss It ! Trading Plan🎯Hi Traders, Investors and Speculators of the Chart📈📉 Syscoin is an altcoin with massive upside potential and currently trading in it's ideal accumulation zone (bargain!). The ideal accumulation zone for any coin is between the 0 and 0.236 Fibonacci Retracement from the ATH down to the lowest low after that. In this video, I take a look at : 📈 Technical Indicators Bollinger Bands together with Phoenix Ascending, targets for near term 📈 Fractal, previous price action on this support zone 📈 Targets with Fibonacci Retracement 📈 Trend lines - Immediate resistance zone 📈 Targets with Wykoff Method I took a look at sysbtc but forgot to add the SYSBTC chart in the video. It's very bullish for the immediate term - meaning that SYSUSDT could gain some ground on BTC and increase independently. What are your thoughts on this? Check out a possible long entry position for Solana: _______________________ 📢Follow us here on TradingView for daily updates and trade ideas on crypto , stocks and commodities 💎Hit like & Follow 👍 We thank you for your support ! CryptoCheck
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Dow Jones Analysis 25.01.2023Hello Traders, welcome to this free and educational analysis. I am going to explain where I think this asset is going to go over the next few days and weeks and where I would look for trading opportunities. If you have any questions or suggestions which asset I should analyse tomorrow, please leave a comment below. I will personally reply to every single comment! If you enjoyed this analysis, I would definitely appreciate it, if you smash that like button and maybe consider following my channel. Thank you for watching and I will see you tomorrow! You can also check out my previous analysis of this asset:
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GBPAUD I Update - 140 pips to upside and what's next!Welcome back! Let me know your thoughts in the comments! **GBPAUD Analysis - Listen to video! We recommend that you keep this pair on your watchlist and enter when the entry criteria of your strategy is met. Please support this idea with a LIKE and COMMENT if you find it useful and Click "Follow" on our profile if you'd like these trade ideas delivered straight to your email in the future. Thanks for your continued support!
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