... that is NOT the question. It's not important if we've "started wave B" and whether this next leg down makes a new low or not, that part is academic. What's important is that the near term trend is downwards because bulls need to consolidate at levels burned through in the last V bottom rally because the days of easy money and QE are OVER.
You can see how this decline has been tracking the inflection points of the 2008 top to a tee and I expect this next bottom to be no different. CPI report comes out on 3/10. We can either get a double top then (just like the prior double top on CPI) or after when market thinks all potential bad news is behind us.
In the near term I doubt we'll drop past the .618 retrace at 4230. Good place to scalp long in the coming week if it makes it there. But the juicy trade is looking for the failed breakout above 4350 and trendline. Per the usual look for a rally into the close above trendline and an exhaustion gap as part of the double top.
You can see how this decline has been tracking the inflection points of the 2008 top to a tee and I expect this next bottom to be no different. CPI report comes out on 3/10. We can either get a double top then (just like the prior double top on CPI) or after when market thinks all potential bad news is behind us.
In the near term I doubt we'll drop past the .618 retrace at 4230. Good place to scalp long in the coming week if it makes it there. But the juicy trade is looking for the failed breakout above 4350 and trendline. Per the usual look for a rally into the close above trendline and an exhaustion gap as part of the double top.
Comment:
Just noticed this on my futures chart... using the 2008 overlay puts the double top on March 16, FOMC day. That's also where the trendlines intersect. As always I think bulls are kidding themselves if they think the Fed is going to help them out here. Powell has already stated QT will be like start of the century QT... which was 17 quarter point hikes in a row... If you think this steroid induced market can maintain these valurations (much less grow) under that environment, you need your head checked.
Comment:
Surprised it punched through the .618 retrace today... looks like bulls are all waiting at the bottom to buy the double bottom. Should set up a bullish shark that goes and retests the support that was lost. Unless CPI is startling good news, I expect that rally to fail... though it may try for it twice before heading back down.
Looks like we'll get that consolidation in this range that I expected. Just got there a lot quicker than I thought.
Looks like we'll get that consolidation in this range that I expected. Just got there a lot quicker than I thought.
Comment:
The aforementioned bullish shark played out beautifully as we hit the .886 retrace overnight and futures bounced hard. Didn't make it quite to the 50% retrace of the leg down but was good enough to dump all longs and start shorts because a rejection there was almost guaranteed.
My thesis on continued consolidation remains, we just got there a lot faster than anticipated due to algos selling off on commodities spikes. I think this wave 5 will be extremely messy much like the pandemic selloff bottom (which is overlaid here). Still expecting a false breakout rally from FOMC, but for the most part traders should respect the ranges here with a bearish bias until something fundamentally changes.
Use today's open/yesterday's close as a midpoint for the next week. I'm still looking at March 15/16 to load on puts, GOLD looks like it could be topping though so we might get some upward momentum overnight.
My thesis on continued consolidation remains, we just got there a lot faster than anticipated due to algos selling off on commodities spikes. I think this wave 5 will be extremely messy much like the pandemic selloff bottom (which is overlaid here). Still expecting a false breakout rally from FOMC, but for the most part traders should respect the ranges here with a bearish bias until something fundamentally changes.
Use today's open/yesterday's close as a midpoint for the next week. I'm still looking at March 15/16 to load on puts, GOLD looks like it could be topping though so we might get some upward momentum overnight.
Comment:
Today's feels off to me... bulls buying the dip ahead of CPI with no fear. Makes me feel like they're gonna pump it on CPI given that we've already sold off on a commodities run, and CPI is for February before the war started so one could easily dupe investors into thinking "hey great report, no inflation problems at all!" despite the fact it isn't factoring in the current situation.
Report releases premarket so one would be wise not to get ambushed here. We're traders, not gamblers.
Report releases premarket so one would be wise not to get ambushed here. We're traders, not gamblers.
