Last time we tore through the 200 day moving average then got rejected by it was the final wave of the 2018 correction. Just happened again so... not good.
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Rejected from the 200 DMA once again. Inflation's higher than expected and Fed Monetary Policy releases tomorrow morning. They've been hawkish so far and the number was bad so I don't see any catalysts to juice this rally. Expecting a C wave to .886 retrace at around 14000 if bulls are lucky.... but could definitely be a wave 5 to a lower low. Holding March 18 315 puts and will cash out when this current wave looks tired.
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Should get a bounce at around 14000 on the bullish gartley for a retest of what was once support, now resistance. Rejection here should embolden bears for what will be wave 5 and the most powerful of this wave down.
FWIW I believe during corrections most bearish structures are ABCs and diagonals (which are comprised of ABCs). If we get this rejection, look for a 5-3-5 wave down to at least the 1.236 extension... possibly all the way down to the 1.618 which marks the .382 retrace of the entire post pandemic rally and completing what I believe is wave A of this correction.
FWIW I believe during corrections most bearish structures are ABCs and diagonals (which are comprised of ABCs). If we get this rejection, look for a 5-3-5 wave down to at least the 1.236 extension... possibly all the way down to the 1.618 which marks the .382 retrace of the entire post pandemic rally and completing what I believe is wave A of this correction.
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100% expect a futures overnight pump. Indices barely budged a quarter percent but the VIX was crushed by 7%. Hint, the big boys don't make their $$$ buying and selling SPY shares.
The Fed minutes move should've read like bad news yet we still pumped anyway. I think people forget the minutes chronicle what transpired during the LAST MEETING prior to the higher than expected CPI numbers. Specifically this...
"Most participants noted that, if inflation does not move down as they expect, it would be appropriate for the (Federal Open Market) Committee to remove policy accommodation at a faster pace than they currently anticipate," the minutes stated."
Considering inflation readings INCREASED since the time of this meeting I'm not sure how this is good news. I guess any time the fed doesn't raise rates "early" now it's good news? Hey good news guys... I DIDN'T get hit by a car today, let's pop some champagne.
Technically we're currently coiled in what could either be a triangle or three drives. Watch that green line... if it breaks, the 5th wave of a three drives is typically a powerful extended 5-3-5 and could potentially reach all the way to the sub 13000 range to complete wave A of this correction.
The Fed minutes move should've read like bad news yet we still pumped anyway. I think people forget the minutes chronicle what transpired during the LAST MEETING prior to the higher than expected CPI numbers. Specifically this...
"Most participants noted that, if inflation does not move down as they expect, it would be appropriate for the (Federal Open Market) Committee to remove policy accommodation at a faster pace than they currently anticipate," the minutes stated."
Considering inflation readings INCREASED since the time of this meeting I'm not sure how this is good news. I guess any time the fed doesn't raise rates "early" now it's good news? Hey good news guys... I DIDN'T get hit by a car today, let's pop some champagne.
Technically we're currently coiled in what could either be a triangle or three drives. Watch that green line... if it breaks, the 5th wave of a three drives is typically a powerful extended 5-3-5 and could potentially reach all the way to the sub 13000 range to complete wave A of this correction.
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I believe we're at the midpoint of a range that we'll stay in until Thursday. As I've stated I believe if the thick green line is pierced we'll draw a powerful 5-3-5 ABC wave downwards to complete the 3 drives.
Wave A should end by EOD Tuesday and B should complete after Thursday's open. C will pierce the previous low and initiate a steep decline to under 13000.
While this is all nice in theory, I believe the Ukraine drama is all pretext for this drop and the real reason is the Fed minutes which I intimated was actually bad news last week despite the brief pop. I'm also slightly bothered by the fact the bulls never made a serious play at the thick red trend line... so it wouldn't surprise me if some deescalation in the conflict initiates a massive short covering rally all the way back to the thick red trendline.
Regardless... the intermediate direction is down.
Wave A should end by EOD Tuesday and B should complete after Thursday's open. C will pierce the previous low and initiate a steep decline to under 13000.
While this is all nice in theory, I believe the Ukraine drama is all pretext for this drop and the real reason is the Fed minutes which I intimated was actually bad news last week despite the brief pop. I'm also slightly bothered by the fact the bulls never made a serious play at the thick red trend line... so it wouldn't surprise me if some deescalation in the conflict initiates a massive short covering rally all the way back to the thick red trendline.
Regardless... the intermediate direction is down.
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Could've started wave C of the final 5th wave of the three drives, or we may still be finishing painting wave B. Will likely be a huge short covering rally later this afternoon or overnight when this downward impulse completes due to all the fools thinking this is a double bottom and we've completed wave A of the whole correction. As stated before I think wave 5 of the 3 drives is extended and will be the most profitable short trade. If it doesn't dump before the weekend then I'm wrong. Watch for ABC waves in 11 swings downwards for signs of diagonals being drawn in the direction of the trend. That will tell you everything tomorrow morning.
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Shit - meet fan. Since the cat's outta the bag I'm expecting choppy action for the next several trading days. Look for a flat wave 4 that will retest the 2 year channel we just fell out of (AND FAIL). Good time to initiate shorts for wave 5 if you like the chop like me. Also looking for some kind of diagonal (expanding one shown here) where bears will get several bites at the apple (just remember to take profits quickly).
I don't know where this will end, but if I had to guess blindly I'd say somewhere between a measured move of waves 1+3 at 12500 or so to the 2.0 extension of wave 4 around 12150. My previous planned low is during the trading day on March 1st and I see no reason to deviate from that plan. Would not bother going long until I see a higher low painted on the 2h chart.
I don't know where this will end, but if I had to guess blindly I'd say somewhere between a measured move of waves 1+3 at 12500 or so to the 2.0 extension of wave 4 around 12150. My previous planned low is during the trading day on March 1st and I see no reason to deviate from that plan. Would not bother going long until I see a higher low painted on the 2h chart.
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Wow, can't believe bears are getting another bite at the apple here... I'm 75% convinced this rally doesn't have legs for one reason -> surging oil prices. Expensive oil means expensive everything else, which means MOAR INFLATION. The speculation that the Fed will u-turn as a result of the Ukraine invasion is completely misguided. If anything the Fed has to wonder if they'll need to take more drastic measures to combat inflation due to climbing commodity pricing.
Kinda reminds me of the fake rally that kicked off after the release of the Fed minutes which actually read as bad news to me, and I was right, the market sold off immediately after the bogus rally. Expecting more of the same here.
If anything just look at the technicals. Are we really going to V bottom here with no QE to back it up? For the B wave to properly get legs, we're going to need some significant accumulation at the bottom, not just a short covering rally based on Fed speculation. I'm almost certain we will get a retest or lower low in the coming week.
Kinda reminds me of the fake rally that kicked off after the release of the Fed minutes which actually read as bad news to me, and I was right, the market sold off immediately after the bogus rally. Expecting more of the same here.
If anything just look at the technicals. Are we really going to V bottom here with no QE to back it up? For the B wave to properly get legs, we're going to need some significant accumulation at the bottom, not just a short covering rally based on Fed speculation. I'm almost certain we will get a retest or lower low in the coming week.
Dump's coming tomorrow, I took some more puts after the bell and will prolly add more at the open. 350 QQQ is a lock.