Parretto principle (20-80): small important things can have great influence in grand scheme of things. Some events have greater weight, than say 80-90% of daily events.
Stocks move based on Supply-demand dynamics (disbalance etc), patterns or trends are just a feedback.
The problem with using charts as a feedback for strength (or feedback for S-D strength) is that: (1) on a expensive market, with extended prices (with high supply too), (2) during important NVDA earnings, it's almost predictable how markets would sink, or at least be volatile.
Demand stalls. Supply gets worried. Price down.
//People are risk averse. Hence.. predictable.
Stocks move based on Supply-demand dynamics (disbalance etc), patterns or trends are just a feedback.
The problem with using charts as a feedback for strength (or feedback for S-D strength) is that: (1) on a expensive market, with extended prices (with high supply too), (2) during important NVDA earnings, it's almost predictable how markets would sink, or at least be volatile.
Demand stalls. Supply gets worried. Price down.
//People are risk averse. Hence.. predictable.
Note
Markets are in a similar context that before election.
50-50 odds for a deeper correction. with
TNX rallying (?). 10/20 Deathcross.But lack of positions.. and EVERYBODY knows it will rally. But still everyone risk averse.
Probabilistically I think it gives 2:1 edge to rally.
//Such events can also work as market tops. Good news and no demand -- defacto market top.
But people lack positions.. hence it can't be 50-50. UP
Note
the outcome for election volatility: Election was on wednesday if not mistaken. Monday was red. Tuesday was volatile. On election day it rocketed. ie direction was clear.Same psychology. Risk aversion. Not saying 100% though lol
Note
red flags do be
DXY strength or demand for USD. Which I think was nr1 indicator for market top in 2020/2022 bull market?but it could also be a bullish indicator - stacking money to buy positions. And DXY falls.
Note
VIX supporting above 20, before big events is a sign of hedging and worry, not predictive driver, I think? ie the pre-election rulebook.
Note
pre-election day, 4th Nov. Rallied, before going red. then a bounce into close. which is todays PA?
Note
Macro Supply-demand imbalance traders.Paul Tudor Jones
Why:
Trades dislocations + reflexivity
Looks for imbalance catalysts (policy pivot, liquidity shock, rate compression)
Trend = fuel until imbalance corrects
Understands psychological + flow reinforcement loops
More “street,” but still the same physics.
---
Chris Cole (Artemis Capital)
Why:
Studies regime shifts + structural imbalances
Trades volatility supply/demand imbalance
Uses long-term capital cycle flows
Obsessed with how liquidity droughts → multi-month trends
Note
Pandemic → CB slams rates to 0→ massive demand for duration
→ supply disappears (QE)
→ imbalance
QE continues, forward rates crash
→ imbalance persists
→ trend accelerates
Inflation appears → CB changes regime
→ QE stops
→ rate expectations reverse
→ imbalance ends → trend ends
Pure force mechanics.
Richard Dennis & the Turtles
trends happen because of persistent supply–demand imbalance.
They didn’t use charts for “patterns.” They used breakouts as evidence that one side overwhelmed the other.
//“When there’s a supply–demand imbalance in an asset class, the trend is explosive.” !!!
//Looks for policy-driven demand surges or “forced sellers.”
//Focuses on crowded trades = future imbalance explosions. !!!
Note
Risk = always defined by how much imbalance could reverse
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.