Didn't expect such a passionate bunch to voice their thoughts over a mere Pig-Peg. Thus, since I've essentially provided zero substantiation for my prediction in the chart above, I will do so in excessive detail in the following comment.
Before I do, I want to clarify a few things, as they pertain to the post:
1) I am a tape-reader, first and foremost 2) I use intuition + experience to make a living from swinging equity/index options 3) Once the tape stops, I then put a great deal of thought into how the price action reflects the current environment, news, etc. 4) This post is solely based on the (very erratic) tape observed this past week and my experience trading blow-off tops
It's an intuitive call, which is why the chart itself is purposefully unhelpful.
Now then, there are MANY reasons that i will elude to in the next comment that absolutely substantiate the overwhelming likelihood for a strong move down.
See below for details:
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I. Extreme Bearish Seasonality Convergence:
There are three highly-established seasonal cycles that have been backtested more times than Pelosi has publically ruined/humiliated herself and the owner(s) of small businesses. These are the a) 212-Week Cycle, b) 40-Week Cycle, and c) 53-Day cycle. I personally know a handful of traders that are consistently profitable solely using their seasonally-derived systems. All of them follow these three cycles closely.
That said, the 212-week cycle (less initial 6 months of historically time-tested bullishness) entered its bearish phase on exactly Feb 19th, 2020 and is set to end around September 2023. This cycle is most important for long-term directional identification, but is not in itself, sufficient to warrant the type of prediction that I just made. However, the other two very well-known cycles (40-Week and 53-day) also turned bearish on Feb 18th and Feb 17th, respectively.
To this point - it is extremely rare when all 3 cycles reside in bearish phases simultaneously, yet it is nearly unprecedented when all three ENTER bearish phases at nearly identical dates. Such a convergence led to the unbelievable selling action that lasted through March.
Now we are approaching the next strongest (in terms of violence) motive wave down within this broader 212-week bearish cycle, which involves the 40-week and 53-day turning bearish at nearly the same date. Since the 212-week is already in a bearish phase, the move down is certain to occur, but the extent of the violence will be capped at whatever was witnessed in February/March. This is because there are only two cycles turning instead of 3.
Again, this is not the reason why I made this Pig-Peg, but it is compelling supporting evidence to support my view.
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II. The Economy is Objectively Horrendous:
I will not discuss my thoughts on the disturbing effects that 10+ years of Keynesian policy has had on the United States. It would be pointless because the effects will remain dormant until the inevitable implosion of the US Dollar. Instead, I will pretend like the US Economy is not an illusion and is, in fact, not one huge IOU to the foreign bagholders of our treasury securities.
Assuming that the data reported is not mightily skewed (it is) toward whatever picture the Federal Reserve wants to paint to the public, the numbers are HORRENDOUS.
Seriously, though. GDP quarterly's are worse than I had expected and I am clearly not an optimist at this very moment in time. Quite frankly, the latest figure is pukeworthy to the point that every person involved in markets should take 2 minutes to understand how detrimental the last half-year has been.
The GDP declines should be the end of this discussion, but let's just shoot the sh*t about employment and inflation anyway. For the sake of brevity, over 10 million Americans are unemployed and the rate of positive weekly change has atrophied. Continued high unemployment = less output going forward = GDP Q4 confidence has reached an unbelievably manic level.
Inflation - the Federal Reserve is either lying or grossly unqualified. When you print that much money, prices go up.
Conclusion: The Federal Reserve is lying.
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III. Politics, Perception and China:
The last presidential debate was, in my opinion, the nail in the coffin as it pertains to foreign confidence in the United States within the context of holding the world's reserve currency. I suspect that rating agencies will start downgrading U.S. Treasuries, which may trigger a very dangerous domino-effect, which includes the eradication of paper USD, subsequent unprecedented demand for gold/silver, realization that there isn't enough in reserve, and finally, the worst possible outcome that I pray does not come to pass: the default of COMEX.
That last part would actually be extremely serious for all modern economies. I do not think this will happen and I really hope it does not.
Secondly, it should be clear that a stimulus deal will not actually pass until the stock market drops far enough for our elected leaders to get off of their asses. This stupid bill should have been past months ago and it's pretty egregious that they continue to tease the American public. I was shocked then because how can you not continuation bet a multi-trillion dollar liquidity pump?? The answer is that our politicians are as self-serving as we all hope they aren't.
Thirdly, China is low-key facing some seriously perturbing banking problems. In short, at least 4 of their largest banks are either defualting or are set to default very soon. Needless to say that once the effects of this start tangibly affecting domestic lending, it will lead to a broader global banking crisis. Honestly, this is so typical these days that I think I might buy the news. Compared with the CURRENCY CRISIS in America, a mere solvency banking pandemic isn't so bad.
Last Words: Just want to give a final shout-out/thank-you to all of the following parties involved that made this glorious trade setup possible:
President Trump - for being the loudest patient in the children's hospital
China - for introducing a new species of swan to the global economy and for its gross negligence towards banking, public health, the Earth, privacy, etc.
The Federal Reserve (Mostly Bernanke) - for introducing the experiment of currency creation on a global scale knowing that the future can only inevitably end in hyperinflation
United States Congress - for playing with people's lives in exchange for political power
New Market Participants (Young Perma-Bulls) - for being excessively greedy and not having the slight bit of experience required to know when risk is orders of magnitude higher than reward
Robinhood - For the indoctrination of many new investors who will be so turned off by the concept of markets as soon as they get their faces ripped off.
That is all.
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That is actually not all. I forgot to provide actual technical analysis, which as we all know (or should know if you're active on TradingView) is the only real reason to enter a given setup.
While I do like candlesticks intraday, the hard work on weekends/after-hours is put into wave analyses and constant vigilance of the current prevailing count + alternative counts. So, here are my thoughts, and then I'll have myself a beer or 6:
- SPX Prevailing Count (Bearish) - Wave (1) completed on September 8th, 2020. We are still traversing a highly extended Wave 2 and are now completing the final phases of (2)C. This seems to have completed with a truncated smaller-degree 5th wave.
This leads to a slightly less prevailing count where the truncated fifth is actually still apart of an ending diagonal that could attempt a slightly higher near-term high above 27900. The difference here is semantic because both patterns will end shortly and both point toward significant price reversal. Either case, this final action to complete Wave (2) should happen via Futures trading Sunday evening, which denotes the start of Wave (3) and subsequent gap down on Monday morning.
- SPX Alternative Count (Bullish) - Although this count is becoming less likely by the day, it could still be interpreted that we are finishing up an extremely drawn-out Wave (4) that involves multiple, complex zig-zags. I would say that the only way to confirm this alternative count (and the definitive start of Wave (5) to new all-time highs or thereabouts), would be a daily close above the line displayed in the chart above that says "Fed Shall Not Pass." Admittedly, I cannot see this happening within the timeframe that it would make contextual sense from a spacial-alignment perspective.
I think this will do for now, but there is a ton of other technically compelling factors that suggest a move higher is increasingly improbable.
- Pig
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*27,900 figure referenced above is clearly the Dow, not SPX. Their movements will be similar enough at these levels where you can follow either one. I prefer the dirty Dow just because of how telling it is when it does finally catch an ask for a >1% daily down move.
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Just bought several puts exp. 10/16 for:
PAYC, TWLO, TTD, DIA, QQQ, ADP, and CTXS.
They were cheap, so I bought em. Would recommend doing the same.
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Might just see some fireworks around 11 - 11:05 AM
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Wouldve been dope if I made this pig-peg today. But I didn't, so now Im 0 for 2.
One of these days Ill peg it right, but for now Ill take the delayed crash.
I don't know if I can take this seriously coming from someone whose reputation points were supposed to be reset to zero last month
poister198
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@WTFpattern, hey man i noticed and commented on his previous post as well! Indeed a pig going to the slaughter rofl
WTFpattern
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@poister198, I point this out mostly just to jab, I like seeing opinions for both long and short and see which make the most sense or look to have validity. Any time someone makes a firm play like this they are just opening themselves up to the chance to get burned. I am still glad to see and will still read his posts.
poister198
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@WTFpattern, yeah i appreciate both long and short charts and learn from them. But ridiculous to say 100% its gonna happen. Not the principle of TA which is about odds and probabilities i believe
UnknownUnicorn5511258
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@WTFpattern, oh no! WTF pattern isn't taking my idea seriously!
Jab away sir, but don't miss out on the drop just because I predicted it.
intellibetscapital
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@WTFpattern, the fact that you took time out to read the post and comment on it suggests that you consider @Perma_Pig seriously
UnknownUnicorn1946597
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How does stuff like this end up on the front page lol xD
morningtomyum
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@RickVBlack, TV needs some serious competition.
UnknownUnicorn5511258
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@RickVBlack, @morningtomyum, Great question. It might be because there are admins on this site who watch tape during the day. (Tape is the real-time bid/ask). Great question, though.
ruchir2030
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are you expecting the bill to pass and still the "FALL" or bill not pass and starts the "FALL" . basically either way?